Correlation Between Ancora/thelen Small-mid and Westwood Short
Can any of the company-specific risk be diversified away by investing in both Ancora/thelen Small-mid and Westwood Short 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 Ancora/thelen Small-mid and Westwood Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ancorathelen Small Mid Cap and Westwood Short Duration, you can compare the effects of market volatilities on Ancora/thelen Small-mid and Westwood Short 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 Ancora/thelen Small-mid with a short position of Westwood Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ancora/thelen Small-mid and Westwood Short.
Diversification Opportunities for Ancora/thelen Small-mid and Westwood Short
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ancora/thelen and Westwood is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ancorathelen Small Mid Cap and Westwood Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Short Duration and Ancora/thelen Small-mid 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 Ancorathelen Small Mid Cap are associated (or correlated) with Westwood Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Short Duration has no effect on the direction of Ancora/thelen Small-mid i.e., Ancora/thelen Small-mid and Westwood Short go up and down completely randomly.
Pair Corralation between Ancora/thelen Small-mid and Westwood Short
Assuming the 90 days horizon Ancorathelen Small Mid Cap is expected to generate 3.09 times more return on investment than Westwood Short. However, Ancora/thelen Small-mid is 3.09 times more volatile than Westwood Short Duration. It trades about 0.08 of its potential returns per unit of risk. Westwood Short Duration is currently generating about 0.11 per unit of risk. If you would invest 1,531 in Ancorathelen Small Mid Cap on September 4, 2024 and sell it today you would earn a total of 736.00 from holding Ancorathelen Small Mid Cap or generate 48.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ancorathelen Small Mid Cap vs. Westwood Short Duration
Performance |
| Timeline |
| Ancora/thelen Small-mid |
| Westwood Short Duration |
Ancora/thelen Small-mid and Westwood Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ancora/thelen Small-mid and Westwood Short
The main advantage of trading using opposite Ancora/thelen Small-mid and Westwood Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ancora/thelen Small-mid position performs unexpectedly, Westwood Short 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 Westwood Short will offset losses from the drop in Westwood Short's long position.The idea behind Ancorathelen Small Mid Cap and Westwood Short Duration 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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