Correlation Between Technology Select and Western Assets

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

By analyzing existing cross correlation between Technology Select Sector and Western Assets Emerging, you can compare the effects of market volatilities on Technology Select and Western Assets 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 Technology Select with a short position of Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Western Assets.

Diversification Opportunities for Technology Select and Western Assets

0.5

Correlation Coefficient

Technology Select  Western Assets

Very weak diversification

The 3 months correlation between Technology and Western is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging and Technology Select 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 Technology Select Sector are associated (or correlated) with Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Technology Select i.e., Technology Select and Western Assets go up and down completely randomly.

Pair Corralation between Technology Select and Western Assets

Considering the 90-day investment horizon Technology Select Sector is expected to generate 4.65 times more return on investment than Western Assets. However, Technology Select is 4.65 times more volatile than Western Assets Emerging. It trades about 0.12 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.04 per unit of risk. If you would invest  13,527  in Technology Select Sector on September 12, 2025 and sell it today you would earn a total of  1,346  from holding Technology Select Sector or generate 9.95% return on investment over 90 days.

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

Technology Select Sector  vs.  Western Assets Emerging

Technology Select Sector

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Select Sector are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Technology Select may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Western Assets Emerging

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Western Assets Emerging are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Western Assets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Technology Select and Western Assets

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

The idea behind Technology Select Sector and Western Assets Emerging 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.