Correlation Between Sp 500 and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Sp 500 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 Sp 500 and Westwood Largecap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Equal and Westwood Largecap Value, you can compare the effects of market volatilities on Sp 500 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 Sp 500 with a short position of Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Westwood Largecap.
Diversification Opportunities for Sp 500 and Westwood Largecap
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between INDEX and Westwood is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Equal 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 Sp 500 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 Sp 500 Equal 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 Sp 500 i.e., Sp 500 and Westwood Largecap go up and down completely randomly.
Pair Corralation between Sp 500 and Westwood Largecap
Assuming the 90 days horizon Sp 500 Equal is expected to generate 0.92 times more return on investment than Westwood Largecap. However, Sp 500 Equal is 1.09 times less risky than Westwood Largecap. It trades about 0.17 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about -0.09 per unit of risk. If you would invest 5,714 in Sp 500 Equal on September 13, 2024 and sell it today you would earn a total of 104.00 from holding Sp 500 Equal or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp 500 Equal vs. Westwood Largecap Value
Performance |
| Timeline |
| Sp 500 Equal |
| Westwood Largecap Value |
Sp 500 and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp 500 and Westwood Largecap
The main advantage of trading using opposite Sp 500 and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 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.| Sp 500 vs. Fa 529 Aggressive | Sp 500 vs. Artisan High Income | Sp 500 vs. Needham Aggressive Growth | Sp 500 vs. Lgm Risk Managed |
| Westwood Largecap vs. Pnc Emerging Markets | Westwood Largecap vs. Shelton Emerging Markets | Westwood Largecap vs. Locorr Market Trend | 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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