Correlation Between Western Asset and Hcm Dynamic

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

Diversification Opportunities for Western Asset and Hcm Dynamic

0.67

Correlation Coefficient

Western Asset  Hcm Dynamic

Poor diversification

The 3 months correlation between Western and Hcm is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Hcm Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hcm Dynamic Income 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 Hcm Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hcm Dynamic Income has no effect on the direction of Western Asset i.e., Western Asset and Hcm Dynamic go up and down completely randomly.

Pair Corralation between Western Asset and Hcm Dynamic

Considering the 90-day investment horizon Western Asset High is expected to generate 2.01 times more return on investment than Hcm Dynamic. However, Western Asset is 2.01 times more volatile than Hcm Dynamic Income. It trades about 0.01 of its potential returns per unit of risk. Hcm Dynamic Income is currently generating about 0.02 per unit of risk. If you would invest  437.00  in Western Asset High on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Western Asset High or generate 2.06% return on investment over 90 days.

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

Western Asset High  vs.  Hcm Dynamic Income

Western Asset High

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Western Asset is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hcm Dynamic Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hcm Dynamic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Hcm Dynamic 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 Hcm Dynamic

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

The idea behind Western Asset High and Hcm Dynamic Income 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.