Correlation Between Old Westbury and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Horizon Active 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 Horizon Active 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 Horizon Active Risk, you can compare the effects of market volatilities on Old Westbury and Horizon Active 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 Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Horizon Active.
Diversification Opportunities for Old Westbury and Horizon Active
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Horizon is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Horizon Active Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Risk 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 Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Risk has no effect on the direction of Old Westbury i.e., Old Westbury and Horizon Active go up and down completely randomly.
Pair Corralation between Old Westbury and Horizon Active
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.0 times more return on investment than Horizon Active. However, Old Westbury is 1.0 times more volatile than Horizon Active Risk. It trades about 0.08 of its potential returns per unit of risk. Horizon Active Risk is currently generating about 0.02 per unit of risk. If you would invest 2,086 in Old Westbury Large on August 29, 2024 and sell it today you would earn a total of 40.00 from holding Old Westbury Large or generate 1.92% 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 Large vs. Horizon Active Risk
Performance |
| Timeline |
| Old Westbury Large |
| Horizon Active Risk |
Old Westbury and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Horizon Active
The main advantage of trading using opposite Old Westbury and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.| Old Westbury vs. American Funds New | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund |
| Horizon Active vs. Aqr Large Cap | Horizon Active vs. Strategic Allocation Aggressive | Horizon Active vs. Hartford Moderate Allocation | Horizon Active vs. Old Westbury Large |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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