Correlation Between Western Asset and Heartland Banccorp

Can any of the company-specific risk be diversified away by investing in both Western Asset and Heartland Banccorp 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 Heartland Banccorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Western Asset High and Heartland Banccorp, you can compare the effects of market volatilities on Western Asset and Heartland Banccorp 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 Heartland Banccorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Heartland Banccorp.

Diversification Opportunities for Western Asset and Heartland Banccorp

-0.07

Correlation Coefficient

Western Asset  Heartland Banccorp

Good diversification

The 3 months correlation between Western and Heartland is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp 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 High are associated (or correlated) with Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Western Asset i.e., Western Asset and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Western Asset and Heartland Banccorp

Considering the 90-day investment horizon Western Asset High is expected to generate 0.58 times more return on investment than Heartland Banccorp. However, Western Asset High is 1.72 times less risky than Heartland Banccorp. It trades about 0.12 of its potential returns per unit of risk. Heartland Banccorp is currently generating about 0.04 per unit of risk. If you would invest  330.00  in Western Asset High on March 31, 2024 and sell it today you would earn a total of  51.00  from holding Western Asset High or generate 15.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.34%
Values	Daily Returns

Western Asset High  vs.  Heartland Banccorp

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset High has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy forward indicators, Western Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Heartland Banccorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Banccorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Heartland Banccorp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and Heartland Banccorp

The main advantage of trading using opposite Western Asset and Heartland Banccorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Heartland Banccorp 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 Heartland Banccorp will offset losses from the drop in Heartland Banccorp's long position.

The idea behind Western Asset High and Heartland Banccorp 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.

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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.