Correlation Between Old Westbury and Health Biotchnology
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Health Biotchnology 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 Health Biotchnology 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 Health Biotchnology Portfolio, you can compare the effects of market volatilities on Old Westbury and Health Biotchnology 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 Health Biotchnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Health Biotchnology.
Diversification Opportunities for Old Westbury and Health Biotchnology
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Health is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Health Biotchnology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Biotchnology 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 Health Biotchnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Biotchnology has no effect on the direction of Old Westbury i.e., Old Westbury and Health Biotchnology go up and down completely randomly.
Pair Corralation between Old Westbury and Health Biotchnology
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.04 times more return on investment than Health Biotchnology. However, Old Westbury is 1.04 times more volatile than Health Biotchnology Portfolio. It trades about 0.1 of its potential returns per unit of risk. Health Biotchnology Portfolio is currently generating about 0.01 per unit of risk. If you would invest 1,506 in Old Westbury Large on September 3, 2024 and sell it today you would earn a total of 644.00 from holding Old Westbury Large or generate 42.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Health Biotchnology Portfolio
Performance |
| Timeline |
| Old Westbury Large |
| Health Biotchnology |
Old Westbury and Health Biotchnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Health Biotchnology
The main advantage of trading using opposite Old Westbury and Health Biotchnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Health Biotchnology 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 Health Biotchnology will offset losses from the drop in Health Biotchnology'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 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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