Correlation Between Western Asset and US Global
Can any of the company-specific risk be diversified away by investing in both Western Asset and US Global 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 US Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and US Global Sea, you can compare the effects of market volatilities on Western Asset and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and US Global.
Diversification Opportunities for Western Asset and US Global
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and SEA is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and US Global Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Sea 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 Municipal are associated (or correlated) with US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Sea has no effect on the direction of Western Asset i.e., Western Asset and US Global go up and down completely randomly.
Pair Corralation between Western Asset and US Global
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.23 times more return on investment than US Global. However, Western Asset Municipal is 4.29 times less risky than US Global. It trades about -0.07 of its potential returns per unit of risk. US Global Sea is currently generating about -0.03 per unit of risk. If you would invest 734.00 in Western Asset Municipal on December 29, 2023 and sell it today you would lose (2.00) from holding Western Asset Municipal or give up 0.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Municipal vs. US Global Sea
Performance |
Timeline |
Western Asset Municipal |
US Global Sea |
Western Asset and US Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and US Global
The main advantage of trading using opposite Western Asset and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
US Global vs. IShares US Dividend | US Global vs. Martin Currie Sustainable | US Global vs. VictoryShares THB Mid | US Global vs. AdvisorShares Gerber Kawasaki |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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