Correlation Between Value Fund and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Value Fund 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 Value Fund and Westwood Largecap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Fund Value and Westwood Largecap Value, you can compare the effects of market volatilities on Value Fund 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 Value Fund with a short position of Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Westwood Largecap.
Diversification Opportunities for Value Fund and Westwood Largecap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Value and Westwood is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value 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 Value 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 Value Fund Value 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 Value Fund i.e., Value Fund and Westwood Largecap go up and down completely randomly.
Pair Corralation between Value Fund and Westwood Largecap
Assuming the 90 days horizon Value Fund is expected to generate 1.0 times less return on investment than Westwood Largecap. In addition to that, Value Fund is 1.12 times more volatile than Westwood Largecap Value. It trades about 0.12 of its total potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.13 per unit of volatility. If you would invest 1,383 in Westwood Largecap Value on September 2, 2024 and sell it today you would earn a total of 159.00 from holding Westwood Largecap Value or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Fund Value vs. Westwood Largecap Value
Performance |
| Timeline |
| Value Fund Value |
| Westwood Largecap Value |
Value Fund and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Westwood Largecap
The main advantage of trading using opposite Value Fund and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund 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.| Value Fund vs. Federated Kaufmann Large | Value Fund vs. Alternative Asset Allocation | Value Fund vs. T Rowe Price | Value Fund vs. Morningstar Unconstrained Allocation |
| Westwood Largecap vs. The Hartford Small | Westwood Largecap vs. Baird Smallmid Cap | Westwood Largecap vs. Champlain Small | Westwood Largecap vs. Small Pany Growth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |