Correlation Between Old Westbury and American Funds
Can any of the company-specific risk be diversified away by investing in both Old Westbury and American Funds 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 American Funds 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 American Funds Retirement, you can compare the effects of market volatilities on Old Westbury and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and American Funds.
Diversification Opportunities for Old Westbury and American Funds
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and American is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and American Funds Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Retirement 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Retirement has no effect on the direction of Old Westbury i.e., Old Westbury and American Funds go up and down completely randomly.
Pair Corralation between Old Westbury and American Funds
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.93 times more return on investment than American Funds. However, Old Westbury is 1.93 times more volatile than American Funds Retirement. It trades about 0.1 of its potential returns per unit of risk. American Funds Retirement is currently generating about 0.06 per unit of risk. If you would invest 2,094 in Old Westbury Large on August 30, 2024 and sell it today you would earn a total of 32.00 from holding Old Westbury Large or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. American Funds Retirement
Performance |
| Timeline |
| Old Westbury Large |
| American Funds Retirement |
Old Westbury and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and American Funds
The main advantage of trading using opposite Old Westbury and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Shelton Funds | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Ab Value Fund | American Funds 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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