Correlation Between High Yield and Old Westbury
Can any of the company-specific risk be diversified away by investing in both High Yield 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 High Yield and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Old Westbury Municipal, you can compare the effects of market volatilities on High Yield 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 High Yield with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Old Westbury.
Diversification Opportunities for High Yield and Old Westbury
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between High and Old is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal and High Yield 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 High Yield Municipal Fund 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 Municipal has no effect on the direction of High Yield i.e., High Yield and Old Westbury go up and down completely randomly.
Pair Corralation between High Yield and Old Westbury
Assuming the 90 days horizon High Yield is expected to generate 1.94 times less return on investment than Old Westbury. In addition to that, High Yield is 1.65 times more volatile than Old Westbury Municipal. It trades about 0.16 of its total potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.51 per unit of volatility. If you would invest 1,149 in Old Westbury Municipal on September 14, 2024 and sell it today you would earn a total of 12.00 from holding Old Westbury Municipal or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Old Westbury Municipal
Performance |
| Timeline |
| High Yield Municipal |
| Old Westbury Municipal |
High Yield and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Old Westbury
The main advantage of trading using opposite High Yield and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield 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.| High Yield vs. John Hancock Money | High Yield vs. The Gabelli Money | High Yield vs. Blackrock Exchange Portfolio | High Yield vs. Matson Money Equity |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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