Correlation Between Fpa Crescent and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Fpa Crescent and Westwood Largecap 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 Fpa Crescent and Westwood Largecap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fpa Crescent Fund and Westwood Largecap Value, you can compare the effects of market volatilities on Fpa Crescent and Westwood Largecap 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 Fpa Crescent with a short position of Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fpa Crescent and Westwood Largecap.
Diversification Opportunities for Fpa Crescent and Westwood Largecap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fpa and Westwood is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fpa Crescent Fund and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value and Fpa Crescent 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 Fpa Crescent Fund are associated (or correlated) with Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Fpa Crescent i.e., Fpa Crescent and Westwood Largecap go up and down completely randomly.
Pair Corralation between Fpa Crescent and Westwood Largecap
Assuming the 90 days horizon Fpa Crescent is expected to generate 1.25 times less return on investment than Westwood Largecap. But when comparing it to its historical volatility, Fpa Crescent Fund is 1.39 times less risky than Westwood Largecap. It trades about 0.15 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,455 in Westwood Largecap Value on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Westwood Largecap Value or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fpa Crescent Fund vs. Westwood Largecap Value
Performance |
| Timeline |
| Fpa Crescent |
| Westwood Largecap Value |
Fpa Crescent and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fpa Crescent and Westwood Largecap
The main advantage of trading using opposite Fpa Crescent and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fpa Crescent position performs unexpectedly, Westwood Largecap 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 Largecap will offset losses from the drop in Westwood Largecap's long position.| Fpa Crescent vs. Permanent Portfolio Class | Fpa Crescent vs. Amg Yacktman Fund | Fpa Crescent vs. Berwyn Income Fund | Fpa Crescent vs. First Eagle Global |
| Westwood Largecap vs. Artisan Emerging Markets | Westwood Largecap vs. Dws Emerging Markets | Westwood Largecap vs. Transamerica Emerging Markets | Westwood Largecap vs. Rbc Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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