Correlation Between Ab New and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Ab New and Old Westbury 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 Ab New and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab New York and Old Westbury New, you can compare the effects of market volatilities on Ab New and Old Westbury 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 Ab New with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab New and Old Westbury.
Diversification Opportunities for Ab New and Old Westbury
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ALNVX and Old is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Ab New York and Old Westbury New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury New and Ab New 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 Ab New York are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury New has no effect on the direction of Ab New i.e., Ab New and Old Westbury go up and down completely randomly.
Pair Corralation between Ab New and Old Westbury
Assuming the 90 days horizon Ab New York is expected to generate 1.35 times more return on investment than Old Westbury. However, Ab New is 1.35 times more volatile than Old Westbury New. It trades about 0.08 of its potential returns per unit of risk. Old Westbury New is currently generating about 0.04 per unit of risk. If you would invest 907.00 in Ab New York on August 27, 2024 and sell it today you would earn a total of 28.00 from holding Ab New York or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab New York vs. Old Westbury New
Performance |
| Timeline |
| Ab New York |
| Old Westbury New |
Ab New and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab New and Old Westbury
The main advantage of trading using opposite Ab New and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab New position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.The idea behind Ab New York and Old Westbury New 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.| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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