Correlation Between Old Westbury and Ab Small
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Ab Small 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 Old Westbury and Ab Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury All and Ab Small Cap, you can compare the effects of market volatilities on Old Westbury and Ab Small 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 Old Westbury with a short position of Ab Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Ab Small.
Diversification Opportunities for Old Westbury and Ab Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and QUAIX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury All and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap and Old Westbury 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 Old Westbury All are associated (or correlated) with Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Old Westbury i.e., Old Westbury and Ab Small go up and down completely randomly.
Pair Corralation between Old Westbury and Ab Small
Assuming the 90 days horizon Old Westbury is expected to generate 1.66 times less return on investment than Ab Small. But when comparing it to its historical volatility, Old Westbury All is 1.69 times less risky than Ab Small. It trades about 0.12 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,452 in Ab Small Cap on September 12, 2024 and sell it today you would earn a total of 1,339 from holding Ab Small Cap or generate 20.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury All vs. Ab Small Cap
Performance |
| Timeline |
| Old Westbury All |
| Ab Small Cap |
Old Westbury and Ab Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Ab Small
The main advantage of trading using opposite Old Westbury and Ab Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Ab Small 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 Ab Small will offset losses from the drop in Ab Small's long position.| Old Westbury vs. Franklin High Yield | Old Westbury vs. Bbh Intermediate Municipal | Old Westbury vs. The National Tax Free | Old Westbury vs. Multisector Bond Sma |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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