Correlation Between Western Asset and Elysee Development

Can any of the company-specific risk be diversified away by investing in both Western Asset and Elysee Development 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 Elysee Development 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 Elysee Development Corp, you can compare the effects of market volatilities on Western Asset and Elysee Development 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 Elysee Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Elysee Development.

Diversification Opportunities for Western Asset and Elysee Development

-0.22

Correlation Coefficient

Western Asset  Elysee Development

Very good diversification

The 3 months correlation between Western and Elysee is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Elysee Development Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elysee Development Corp 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 Elysee Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elysee Development Corp has no effect on the direction of Western Asset i.e., Western Asset and Elysee Development go up and down completely randomly.

Pair Corralation between Western Asset and Elysee Development

Considering the 90-day investment horizon Western Asset High is expected to generate 0.1 times more return on investment than Elysee Development. However, Western Asset High is 9.78 times less risky than Elysee Development. It trades about 0.03 of its potential returns per unit of risk. Elysee Development Corp is currently generating about -0.01 per unit of risk. If you would invest  392.00  in Western Asset High on September 14, 2024 and sell it today you would earn a total of  4.00  from holding Western Asset High or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Western Asset High  vs.  Elysee Development Corp

Western Asset High

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Elysee Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elysee Development Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Elysee Development is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Western Asset and Elysee Development

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

The idea behind Western Asset High and Elysee Development Corp 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.