Correlation Between Golub Capital and Western Asset

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

By analyzing existing cross correlation between Golub Capital BDC and Western Asset Imf, you can compare the effects of market volatilities on Golub Capital and Western Asset 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 Golub Capital with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golub Capital and Western Asset.

Diversification Opportunities for Golub Capital and Western Asset

0.15

Correlation Coefficient

Golub Capital  Western Asset

Average diversification

The 3 months correlation between Golub and Western is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Western Asset Imf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Imf and Golub Capital 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 Golub Capital BDC are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Imf has no effect on the direction of Golub Capital i.e., Golub Capital and Western Asset go up and down completely randomly.

Pair Corralation between Golub Capital and Western Asset

Given the investment horizon of 90 days Golub Capital is expected to generate 2.67 times less return on investment than Western Asset. In addition to that, Golub Capital is 1.69 times more volatile than Western Asset Imf. It trades about 0.05 of its total potential returns per unit of risk. Western Asset Imf is currently generating about 0.22 per unit of volatility. If you would invest  791.00  in Western Asset Imf on August 30, 2024 and sell it today you would earn a total of  21.00  from holding Western Asset Imf or generate 2.65% return on investment over 90 days.

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

Golub Capital BDC  vs.  Western Asset Imf

Golub Capital BDC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Golub Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Western Asset Imf

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Imf are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental drivers, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Golub Capital and Western Asset

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

The idea behind Golub Capital BDC and Western Asset Imf 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.