Correlation Between Western Asset and Gmo Sgm

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

Diversification Opportunities for Western Asset and Gmo Sgm

0.0

Correlation Coefficient

Western Asset  Gmo Sgm

Pay attention - limited upside

The 3 months correlation between Western and Gmo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Gmo Sgm Major in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Sgm Major 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 Gmo Sgm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Sgm Major has no effect on the direction of Western Asset i.e., Western Asset and Gmo Sgm go up and down completely randomly.

Pair Corralation between Western Asset and Gmo Sgm

If you would invest  1,507  in Western Asset Managed on September 5, 2024 and sell it today you would earn a total of  12.00  from holding Western Asset Managed or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Western Asset Managed  vs.  Gmo Sgm Major

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 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.

Gmo Sgm Major

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Sgm Major has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Gmo Sgm 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 Gmo Sgm

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

The idea behind Western Asset Managed and Gmo Sgm Major 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..