Correlation Between Western Asset and Aluminum Corp

Can any of the company-specific risk be diversified away by investing in both Western Asset and Aluminum Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Western Asset and Aluminum Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Western Asset Investment and Aluminum Corp, you can compare the effects of market volatilities on Western Asset and Aluminum Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Western Asset with a short position of Aluminum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aluminum Corp.

Diversification Opportunities for Western Asset and Aluminum Corp

0.0

Correlation Coefficient

Western Asset  Aluminum Corp

Pay attention - limited upside

The 3 months correlation between Western and Aluminum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Aluminum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp and Western Asset is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Western Asset Investment are associated (or correlated) with Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Western Asset i.e., Western Asset and Aluminum Corp go up and down completely randomly.

Pair Corralation between Western Asset and Aluminum Corp

If you would invest  1,684  in Western Asset Investment on February 23, 2024 and sell it today you would earn a total of  11.00  from holding Western Asset Investment or generate 0.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Western Asset Investment  vs.  Aluminum Corp

Western Asset Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Aluminum Corp is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Asset and Aluminum Corp

The main advantage of trading using opposite Western Asset and Aluminum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aluminum Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aluminum Corp will offset losses from the drop in Aluminum Corp's long position.

The idea behind Western Asset Investment and Aluminum Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.