Correlation Between DMY Squared and Westwood Holdings
Can any of the company-specific risk be diversified away by investing in both DMY Squared and Westwood Holdings 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 DMY Squared and Westwood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between dMY Squared Technology and Westwood Holdings Group, you can compare the effects of market volatilities on DMY Squared and Westwood Holdings 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 DMY Squared with a short position of Westwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DMY Squared and Westwood Holdings.
Diversification Opportunities for DMY Squared and Westwood Holdings
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DMY and Westwood is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding dMY Squared Technology and Westwood Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Holdings and DMY Squared 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 dMY Squared Technology are associated (or correlated) with Westwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Holdings has no effect on the direction of DMY Squared i.e., DMY Squared and Westwood Holdings go up and down completely randomly.
Pair Corralation between DMY Squared and Westwood Holdings
Given the investment horizon of 90 days dMY Squared Technology is expected to generate 0.52 times more return on investment than Westwood Holdings. However, dMY Squared Technology is 1.93 times less risky than Westwood Holdings. It trades about 0.24 of its potential returns per unit of risk. Westwood Holdings Group is currently generating about 0.1 per unit of risk. If you would invest 1,070 in dMY Squared Technology on November 29, 2024 and sell it today you would earn a total of 80.00 from holding dMY Squared Technology or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
dMY Squared Technology vs. Westwood Holdings Group
Performance |
| Timeline |
| dMY Squared Technology |
| Westwood Holdings |
DMY Squared and Westwood Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DMY Squared and Westwood Holdings
The main advantage of trading using opposite DMY Squared and Westwood Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DMY Squared position performs unexpectedly, Westwood Holdings 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 Holdings will offset losses from the drop in Westwood Holdings' long position.The idea behind dMY Squared Technology and Westwood Holdings Group 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.| Westwood Holdings vs. MFS Investment Grade | Westwood Holdings vs. Eaton Vance National | Westwood Holdings vs. Invesco Trust For | Westwood Holdings vs. Invesco California Value |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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