Correlation Between Old Westbury and Parametric Intl
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Parametric Intl 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 Parametric Intl 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 Parametric Intl Equity, you can compare the effects of market volatilities on Old Westbury and Parametric Intl 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 Parametric Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Parametric Intl.
Diversification Opportunities for Old Westbury and Parametric Intl
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Parametric is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Parametric Intl Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parametric Intl Equity 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 Parametric Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parametric Intl Equity has no effect on the direction of Old Westbury i.e., Old Westbury and Parametric Intl go up and down completely randomly.
Pair Corralation between Old Westbury and Parametric Intl
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.03 times more return on investment than Parametric Intl. However, Old Westbury is 1.03 times more volatile than Parametric Intl Equity. It trades about 0.11 of its potential returns per unit of risk. Parametric Intl Equity is currently generating about 0.05 per unit of risk. If you would invest 1,463 in Old Westbury Large on September 5, 2024 and sell it today you would earn a total of 692.00 from holding Old Westbury Large or generate 47.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Old Westbury Large vs. Parametric Intl Equity
Performance |
| Timeline |
| Old Westbury Large |
| Parametric Intl Equity |
Old Westbury and Parametric Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Parametric Intl
The main advantage of trading using opposite Old Westbury and Parametric Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Parametric Intl 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 Parametric Intl will offset losses from the drop in Parametric Intl's long position.| Old Westbury vs. The Gabelli Small | Old Westbury vs. Small Cap Stock | Old Westbury vs. Lord Abbett Diversified | Old Westbury vs. T Rowe Price |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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