Correlation Between Western Asset and Mexico Equity

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

Diversification Opportunities for Western Asset and Mexico Equity

0.62

Correlation Coefficient

Western Asset  Mexico Equity

Poor diversification

The 3 months correlation between Western and Mexico is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Mexico Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexico Equity And 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 Mexico Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexico Equity And has no effect on the direction of Western Asset i.e., Western Asset and Mexico Equity go up and down completely randomly.

Pair Corralation between Western Asset and Mexico Equity

Considering the 90-day investment horizon Western Asset Managed is expected to generate 0.53 times more return on investment than Mexico Equity. However, Western Asset Managed is 1.9 times less risky than Mexico Equity. It trades about 0.04 of its potential returns per unit of risk. Mexico Equity And is currently generating about -0.01 per unit of risk. If you would invest  951.00  in Western Asset Managed on September 3, 2024 and sell it today you would earn a total of  116.00  from holding Western Asset Managed or generate 12.2% return on investment over 90 days.

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

Western Asset Managed  vs.  Mexico Equity And

Western Asset Managed

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Managed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Mexico Equity And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mexico Equity And has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Mexico Equity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Asset and Mexico Equity

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

The idea behind Western Asset Managed and Mexico Equity And 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.