Correlation Between Federated Kaufmann and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Federated Kaufmann 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 Federated Kaufmann and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Kaufmann Large and Old Westbury Large, you can compare the effects of market volatilities on Federated Kaufmann 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 Federated Kaufmann with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Kaufmann and Old Westbury.
Diversification Opportunities for Federated Kaufmann and Old Westbury
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FEDERATED and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Federated Kaufmann Large 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 Federated Kaufmann 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 Federated Kaufmann Large 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 Federated Kaufmann i.e., Federated Kaufmann and Old Westbury go up and down completely randomly.
Pair Corralation between Federated Kaufmann and Old Westbury
Assuming the 90 days horizon Federated Kaufmann Large is expected to generate 1.46 times more return on investment than Old Westbury. However, Federated Kaufmann is 1.46 times more volatile than Old Westbury Large. It trades about 0.2 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.16 per unit of risk. If you would invest 1,901 in Federated Kaufmann Large on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Federated Kaufmann Large or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Kaufmann Large vs. Old Westbury Large
Performance |
| Timeline |
| Federated Kaufmann Large |
| Old Westbury Large |
Federated Kaufmann and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Kaufmann and Old Westbury
The main advantage of trading using opposite Federated Kaufmann and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Kaufmann 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.| Federated Kaufmann vs. Europacific Growth Fund | Federated Kaufmann vs. Washington Mutual Investors | Federated Kaufmann vs. Capital World Growth | Federated Kaufmann vs. HUMANA INC |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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