Correlation Between Rbc Bluebay and Western Asset

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

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

Diversification Opportunities for Rbc Bluebay and Western Asset

-0.16

Correlation Coefficient

Rbc Bluebay  Western Asset

Good diversification

The 3 months correlation between Rbc and Western is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Rbc Bluebay Core and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Rbc Bluebay 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 Rbc Bluebay Core 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 High has no effect on the direction of Rbc Bluebay i.e., Rbc Bluebay and Western Asset go up and down completely randomly.

Pair Corralation between Rbc Bluebay and Western Asset

Assuming the 90 days horizon Rbc Bluebay is expected to generate 3.65 times less return on investment than Western Asset. In addition to that, Rbc Bluebay is 1.95 times more volatile than Western Asset High. It trades about 0.03 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.2 per unit of volatility. If you would invest  693.00  in Western Asset High on September 3, 2024 and sell it today you would earn a total of  15.00  from holding Western Asset High or generate 2.16% return on investment over 90 days.

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

Rbc Bluebay Core  vs.  Western Asset High

Rbc Bluebay Core

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Bluebay Core are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rbc Bluebay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset High

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rbc Bluebay and Western Asset

The main advantage of trading using opposite Rbc Bluebay and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rbc Bluebay 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 Rbc Bluebay Core and Western Asset High 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.