Correlation Between Old Westbury and Capital World
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Capital World 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 World 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 World Growth, you can compare the effects of market volatilities on Old Westbury and Capital World 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 World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Capital World.
Diversification Opportunities for Old Westbury and Capital World
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Capital is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Capital World Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Growth 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 World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Growth has no effect on the direction of Old Westbury i.e., Old Westbury and Capital World go up and down completely randomly.
Pair Corralation between Old Westbury and Capital World
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.07 times more return on investment than Capital World. However, Old Westbury is 1.07 times more volatile than Capital World Growth. It trades about 0.14 of its potential returns per unit of risk. Capital World Growth is currently generating about -0.02 per unit of risk. If you would invest 2,083 in Old Westbury Large on August 26, 2024 and sell it today you would earn a total of 43.00 from holding Old Westbury Large or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Capital World Growth
Performance |
| Timeline |
| Old Westbury Large |
| Capital World Growth |
Old Westbury and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Capital World
The main advantage of trading using opposite Old Westbury and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Capital World 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 World will offset losses from the drop in Capital World's long position.| Old Westbury vs. Balanced Fund Retail | Old Westbury vs. Vanguard Telecommunication Services | Old Westbury vs. Locorr Dynamic Equity | Old Westbury vs. Artisan Select Equity |
| Capital World vs. Old Westbury Large | Capital World vs. Aqr Large Cap | Capital World vs. Quantitative U S | Capital World vs. Goldman Sachs Large |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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