Correlation Between Old Westbury and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Consumer Staples 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 Consumer Staples 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 Consumer Staples Portfolio, you can compare the effects of market volatilities on Old Westbury and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Consumer Staples.
Diversification Opportunities for Old Westbury and Consumer Staples
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Consumer is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Consumer Staples Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Por 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Por has no effect on the direction of Old Westbury i.e., Old Westbury and Consumer Staples go up and down completely randomly.
Pair Corralation between Old Westbury and Consumer Staples
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.07 times more return on investment than Consumer Staples. However, Old Westbury is 1.07 times more volatile than Consumer Staples Portfolio. It trades about 0.14 of its potential returns per unit of risk. Consumer Staples Portfolio is currently generating about 0.07 per unit of risk. If you would invest 1,659 in Old Westbury Large on August 31, 2024 and sell it today you would earn a total of 479.00 from holding Old Westbury Large or generate 28.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Consumer Staples Portfolio
Performance |
| Timeline |
| Old Westbury Large |
| Consumer Staples Por |
Old Westbury and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Consumer Staples
The main advantage of trading using opposite Old Westbury and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| Old Westbury vs. American Funds New | Old Westbury vs. American Funds New | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund |
| Consumer Staples vs. Old Westbury Large | Consumer Staples vs. T Rowe Price | Consumer Staples vs. Jhancock Disciplined Value | Consumer Staples vs. T Rowe Price |
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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