Correlation Between Old Westbury and Thornburg Developing

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Can any of the company-specific risk be diversified away by investing in both Old Westbury and Thornburg Developing 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 Thornburg Developing 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 Thornburg Developing World, you can compare the effects of market volatilities on Old Westbury and Thornburg Developing 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 Thornburg Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Thornburg Developing.

Diversification Opportunities for Old Westbury and Thornburg Developing

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Old and Thornburg is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Thornburg Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Developing 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 Thornburg Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Developing has no effect on the direction of Old Westbury i.e., Old Westbury and Thornburg Developing go up and down completely randomly.

Pair Corralation between Old Westbury and Thornburg Developing

Assuming the 90 days horizon Old Westbury Large is expected to generate 0.88 times more return on investment than Thornburg Developing. However, Old Westbury Large is 1.13 times less risky than Thornburg Developing. It trades about 0.11 of its potential returns per unit of risk. Thornburg Developing World is currently generating about 0.0 per unit of risk. If you would invest  1,930  in Old Westbury Large on September 1, 2024 and sell it today you would earn a total of  208.00  from holding Old Westbury Large or generate 10.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.21%
ValuesDaily Returns

Old Westbury Large  vs.  Thornburg Developing World

 Performance 
       Timeline  
Old Westbury Large 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Large are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Old Westbury may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Thornburg Developing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thornburg Developing World has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Thornburg Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Old Westbury and Thornburg Developing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Old Westbury and Thornburg Developing

The main advantage of trading using opposite Old Westbury and Thornburg Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Thornburg Developing 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 Thornburg Developing will offset losses from the drop in Thornburg Developing's long position.
The idea behind Old Westbury Large and Thornburg Developing World pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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