Correlation Between Old Westbury and Capital Income
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Capital Income 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 Capital Income 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 Capital Income Builder, you can compare the effects of market volatilities on Old Westbury and Capital Income 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 Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Capital Income.
Diversification Opportunities for Old Westbury and Capital Income
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Old and Capital is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Old Westbury i.e., Old Westbury and Capital Income go up and down completely randomly.
Pair Corralation between Old Westbury and Capital Income
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.46 times more return on investment than Capital Income. However, Old Westbury is 1.46 times more volatile than Capital Income Builder. It trades about 0.09 of its potential returns per unit of risk. Capital Income Builder is currently generating about 0.03 per unit of risk. If you would invest 2,132 in Old Westbury Large on September 13, 2024 and sell it today you would earn a total of 19.00 from holding Old Westbury Large or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Capital Income Builder
Performance |
| Timeline |
| Old Westbury Large |
| Capital Income Builder |
Old Westbury and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Capital Income
The main advantage of trading using opposite Old Westbury and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| Old Westbury vs. Prudential Government Income | Old Westbury vs. Franklin Adjustable Government | Old Westbury vs. Payden Government Fund | Old Westbury vs. Short Term Government Fund |
| Capital Income vs. Putnam Money Market | Capital Income vs. Blackrock Exchange Portfolio | Capital Income vs. John Hancock Money | Capital Income vs. Schwab Treasury Money |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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