Correlation Between Western Asset and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset and Sit Emerging 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 Sit Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Sit Emerging Markets, you can compare the effects of market volatilities on Western Asset and Sit Emerging 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 Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sit Emerging.
Diversification Opportunities for Western Asset and Sit Emerging
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Sit is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets 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 Inflation are associated (or correlated) with Sit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of Western Asset i.e., Western Asset and Sit Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Sit Emerging
Assuming the 90 days horizon Western Asset Inflation is expected to under-perform the Sit Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Inflation is 1.08 times less risky than Sit Emerging. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Sit Emerging Markets is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 880.00 in Sit Emerging Markets on September 6, 2024 and sell it today you would lose (3.00) from holding Sit Emerging Markets or give up 0.34% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Inflation vs. Sit Emerging Markets
Performance |
Timeline |
Western Asset Inflation |
Sit Emerging Markets |
Western Asset and Sit Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Sit Emerging
The main advantage of trading using opposite Western Asset and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Sit Emerging 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 Sit Emerging will offset losses from the drop in Sit Emerging's long position.Western Asset vs. Prudential Health Sciences | Western Asset vs. Blackrock Health Sciences | Western Asset vs. Allianzgi Health Sciences | Western Asset vs. Baron Health Care |
Sit Emerging vs. Guggenheim Risk Managed | Sit Emerging vs. Great West Real Estate | Sit Emerging vs. Dunham Real Estate | Sit Emerging vs. Pender Real Estate |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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