Correlation Between Western Asset and A SPAC

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

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

Diversification Opportunities for Western Asset and A SPAC

0.75

Correlation Coefficient

Western Asset  A SPAC

Poor diversification

The 3 months correlation between Western and ASCB is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and A SPAC II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A SPAC II 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 Global are associated (or correlated) with A SPAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A SPAC II has no effect on the direction of Western Asset i.e., Western Asset and A SPAC go up and down completely randomly.

Pair Corralation between Western Asset and A SPAC

Considering the 90-day investment horizon Western Asset Global is expected to under-perform the A SPAC. In addition to that, Western Asset is 2.36 times more volatile than A SPAC II. It trades about -0.18 of its total potential returns per unit of risk. A SPAC II is currently generating about -0.13 per unit of volatility. If you would invest  1,116  in A SPAC II on September 3, 2024 and sell it today you would lose (20.00) from holding A SPAC II or give up 1.79% of portfolio value over 90 days.

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

Western Asset Global  vs.  A SPAC II

Western Asset Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

A SPAC II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A SPAC II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, A SPAC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Western Asset and A SPAC

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

The idea behind Western Asset Global and A SPAC II 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.