Correlation Between Consumer Staples and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Consumer Staples 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 Consumer Staples and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Portfolio and Old Westbury Large, you can compare the effects of market volatilities on Consumer Staples 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 Consumer Staples with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Old Westbury.
Diversification Opportunities for Consumer Staples and Old Westbury
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consumer and Old is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Consumer Staples 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 Consumer Staples Portfolio 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 Large has no effect on the direction of Consumer Staples i.e., Consumer Staples and Old Westbury go up and down completely randomly.
Pair Corralation between Consumer Staples and Old Westbury
Assuming the 90 days horizon Consumer Staples is expected to generate 2.61 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Consumer Staples Portfolio is 1.05 times less risky than Old Westbury. It trades about 0.05 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,585 in Old Westbury Large on August 31, 2024 and sell it today you would earn a total of 553.00 from holding Old Westbury Large or generate 34.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Portfolio vs. Old Westbury Large
Performance |
| Timeline |
| Consumer Staples Por |
| Old Westbury Large |
Consumer Staples and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Old Westbury
The main advantage of trading using opposite Consumer Staples and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples 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.| Consumer Staples vs. Old Westbury Large | Consumer Staples vs. T Rowe Price | Consumer Staples vs. Jhancock Disciplined Value | Consumer Staples vs. T Rowe Price |
| Old Westbury vs. American Funds New | Old Westbury vs. American Funds New | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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