Correlation Between Western Asset and Qs Conservative

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

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

Diversification Opportunities for Western Asset and Qs Conservative

0.04

Correlation Coefficient

Western Asset  Qs Conservative

Significant diversification

The 3 months correlation between Western and SCBCX is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Qs Servative Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Servative Growth 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 Managed are associated (or correlated) with Qs Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Servative Growth has no effect on the direction of Western Asset i.e., Western Asset and Qs Conservative go up and down completely randomly.

Pair Corralation between Western Asset and Qs Conservative

Assuming the 90 days horizon Western Asset Managed is expected to generate 0.79 times more return on investment than Qs Conservative. However, Western Asset Managed is 1.26 times less risky than Qs Conservative. It trades about -0.05 of its potential returns per unit of risk. Qs Servative Growth is currently generating about -0.06 per unit of risk. If you would invest  1,515  in Western Asset Managed on August 17, 2024 and sell it today you would lose (7.00) from holding Western Asset Managed or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Western Asset Managed  vs.  Qs Servative Growth

Western Asset Managed

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Managed are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qs Servative Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Servative Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Qs Conservative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and Qs Conservative

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

The idea behind Western Asset Managed and Qs Servative Growth 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.