Correlation Between Western Asset and Analog Devices
Can any of the company-specific risk be diversified away by investing in both Western Asset and Analog Devices 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 Analog Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Imf and Analog Devices, you can compare the effects of market volatilities on Western Asset and Analog Devices 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 Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Analog Devices.
Diversification Opportunities for Western Asset and Analog Devices
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Analog is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Imf and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices 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 Imf are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Western Asset i.e., Western Asset and Analog Devices go up and down completely randomly.
Pair Corralation between Western Asset and Analog Devices
Considering the 90-day investment horizon Western Asset Imf is expected to generate 0.2 times more return on investment than Analog Devices. However, Western Asset Imf is 5.0 times less risky than Analog Devices. It trades about -0.34 of its potential returns per unit of risk. Analog Devices is currently generating about -0.08 per unit of risk. If you would invest 794.00 in Western Asset Imf on January 20, 2024 and sell it today you would lose (21.00) from holding Western Asset Imf or give up 2.64% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Imf vs. Analog Devices
Performance |
Timeline |
Western Asset Imf |
Analog Devices |
Western Asset and Analog Devices Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Analog Devices
The main advantage of trading using opposite Western Asset and Analog Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Analog Devices 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 Analog Devices will offset losses from the drop in Analog Devices' long position.Western Asset vs. Eaton Vance Short | Western Asset vs. Allianzgi Diversified Income | Western Asset vs. DWS Municipal Income | Western Asset vs. Brookfield Business Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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