Correlation Between Old Westbury and Jennison Natural
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Jennison Natural 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 Jennison Natural 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 Jennison Natural Resources, you can compare the effects of market volatilities on Old Westbury and Jennison Natural 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 Jennison Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Jennison Natural.
Diversification Opportunities for Old Westbury and Jennison Natural
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Jennison is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res 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 Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Old Westbury i.e., Old Westbury and Jennison Natural go up and down completely randomly.
Pair Corralation between Old Westbury and Jennison Natural
Assuming the 90 days horizon Old Westbury Large is expected to generate 0.58 times more return on investment than Jennison Natural. However, Old Westbury Large is 1.71 times less risky than Jennison Natural. It trades about 0.16 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about 0.04 per unit of risk. If you would invest 1,579 in Old Westbury Large on September 4, 2024 and sell it today you would earn a total of 571.00 from holding Old Westbury Large or generate 36.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Old Westbury Large vs. Jennison Natural Resources
Performance |
| Timeline |
| Old Westbury Large |
| Jennison Natural Res |
Old Westbury and Jennison Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Jennison Natural
The main advantage of trading using opposite Old Westbury and Jennison Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Jennison Natural 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 Jennison Natural will offset losses from the drop in Jennison Natural's long position.| Old Westbury vs. Us Government Securities | Old Westbury vs. Short Term Government Fund | Old Westbury vs. Prudential Government Income | Old Westbury vs. Us Government Plus |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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