Correlation Between Balanced Fund and Westwood Income
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Westwood Income 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 Balanced Fund and Westwood Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Westwood Income Opportunity, you can compare the effects of market volatilities on Balanced Fund and Westwood Income 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 Balanced Fund with a short position of Westwood Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Westwood Income.
Diversification Opportunities for Balanced Fund and Westwood Income
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Balanced and Westwood is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Westwood Income Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Income Oppo and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Westwood Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Income Oppo has no effect on the direction of Balanced Fund i.e., Balanced Fund and Westwood Income go up and down completely randomly.
Pair Corralation between Balanced Fund and Westwood Income
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 1.42 times more return on investment than Westwood Income. However, Balanced Fund is 1.42 times more volatile than Westwood Income Opportunity. It trades about 0.13 of its potential returns per unit of risk. Westwood Income Opportunity is currently generating about 0.16 per unit of risk. If you would invest 1,400 in Balanced Fund Retail on September 12, 2024 and sell it today you would earn a total of 56.00 from holding Balanced Fund Retail or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Balanced Fund Retail vs. Westwood Income Opportunity
Performance |
| Timeline |
| Balanced Fund Retail |
| Westwood Income Oppo |
Balanced Fund and Westwood Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Westwood Income
The main advantage of trading using opposite Balanced Fund and Westwood Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Westwood Income 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 Income will offset losses from the drop in Westwood Income's long position.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Westwood Income vs. Prudential Government Money | Westwood Income vs. Cref Money Market | Westwood Income vs. Hewitt Money Market | Westwood Income vs. Money Market Obligations |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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