Correlation Between Old Westbury and Equity Income
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Equity Income 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 Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Large and Equity Income Fund, you can compare the effects of market volatilities on Old Westbury and Equity Income 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 Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Equity Income.
Diversification Opportunities for Old Westbury and Equity Income
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Equity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income 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 Large are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Old Westbury i.e., Old Westbury and Equity Income go up and down completely randomly.
Pair Corralation between Old Westbury and Equity Income
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.15 times more return on investment than Equity Income. However, Old Westbury is 1.15 times more volatile than Equity Income Fund. It trades about 0.32 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.31 per unit of risk. If you would invest 2,064 in Old Westbury Large on September 2, 2024 and sell it today you would earn a total of 86.00 from holding Old Westbury Large or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Equity Income Fund
Performance |
| Timeline |
| Old Westbury Large |
| Equity Income |
Old Westbury and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Equity Income
The main advantage of trading using opposite Old Westbury and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.| Old Westbury vs. Guidemark E Fixed | Old Westbury vs. Artisan High Income | Old Westbury vs. Versatile Bond Portfolio | Old Westbury vs. Ab Global Bond |
| Equity Income vs. Applied Finance Explorer | Equity Income vs. Boston Partners Small | Equity Income vs. Ab Discovery Value | Equity Income vs. Fpa Queens Road |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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