Correlation Between Old Westbury and Global Opportunity
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Global Opportunity 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 Global Opportunity 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 Global Opportunity Portfolio, you can compare the effects of market volatilities on Old Westbury and Global Opportunity 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 Global Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Global Opportunity.
Diversification Opportunities for Old Westbury and Global Opportunity
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Global Opportunity Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Opportunity 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 Global Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Opportunity has no effect on the direction of Old Westbury i.e., Old Westbury and Global Opportunity go up and down completely randomly.
Pair Corralation between Old Westbury and Global Opportunity
Assuming the 90 days horizon Old Westbury is expected to generate 1.25 times less return on investment than Global Opportunity. But when comparing it to its historical volatility, Old Westbury Large is 1.06 times less risky than Global Opportunity. It trades about 0.34 of its potential returns per unit of risk. Global Opportunity Portfolio is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,153 in Global Opportunity Portfolio on September 3, 2024 and sell it today you would earn a total of 167.00 from holding Global Opportunity Portfolio or generate 5.3% 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. Global Opportunity Portfolio
Performance |
| Timeline |
| Old Westbury Large |
| Global Opportunity |
Old Westbury and Global Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Global Opportunity
The main advantage of trading using opposite Old Westbury and Global Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Global Opportunity 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 Global Opportunity will offset losses from the drop in Global Opportunity's 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 |
| Global Opportunity vs. Scharf Global Opportunity | Global Opportunity vs. Old Westbury Large | Global Opportunity vs. Growth Strategy Fund | Global Opportunity vs. Issachar Fund Class |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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