Correlation Between Old Westbury and Vanguard Equity
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Vanguard Equity 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 Vanguard Equity 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 Vanguard Equity Income, you can compare the effects of market volatilities on Old Westbury and Vanguard Equity 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 Vanguard Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Vanguard Equity.
Diversification Opportunities for Old Westbury and Vanguard Equity
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Vanguard Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Equity Income 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 Vanguard Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Equity Income has no effect on the direction of Old Westbury i.e., Old Westbury and Vanguard Equity go up and down completely randomly.
Pair Corralation between Old Westbury and Vanguard Equity
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.01 times more return on investment than Vanguard Equity. However, Old Westbury is 1.01 times more volatile than Vanguard Equity Income. It trades about 0.1 of its potential returns per unit of risk. Vanguard Equity Income is currently generating about 0.06 per unit of risk. If you would invest 1,530 in Old Westbury Large on September 1, 2024 and sell it today you would earn a total of 608.00 from holding Old Westbury Large or generate 39.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Old Westbury Large vs. Vanguard Equity Income
Performance |
| Timeline |
| Old Westbury Large |
| Vanguard Equity Income |
Old Westbury and Vanguard Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Vanguard Equity
The main advantage of trading using opposite Old Westbury and Vanguard Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Vanguard Equity 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 Vanguard Equity will offset losses from the drop in Vanguard Equity's long position.The idea behind Old Westbury Large and Vanguard Equity Income 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.| Vanguard Equity vs. Vanguard Wellington Fund | Vanguard Equity vs. Vanguard Wellesley Income | Vanguard Equity vs. Vanguard Mid Cap Index | Vanguard Equity vs. Vanguard Health Care |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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