Correlation Between Old Westbury and High Yield
Can any of the company-specific risk be diversified away by investing in both Old Westbury and High Yield 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 High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and High Yield Municipal Fund, you can compare the effects of market volatilities on Old Westbury and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and High Yield.
Diversification Opportunities for Old Westbury and High Yield
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and High is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and High Yield Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Municipal 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 Municipal are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Municipal has no effect on the direction of Old Westbury i.e., Old Westbury and High Yield go up and down completely randomly.
Pair Corralation between Old Westbury and High Yield
Assuming the 90 days horizon Old Westbury is expected to generate 1.8 times less return on investment than High Yield. But when comparing it to its historical volatility, Old Westbury Municipal is 1.72 times less risky than High Yield. It trades about 0.07 of its potential returns per unit of risk. High Yield Municipal Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 814.00 in High Yield Municipal Fund on September 14, 2024 and sell it today you would earn a total of 84.00 from holding High Yield Municipal Fund or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Old Westbury Municipal vs. High Yield Municipal Fund
Performance |
| Timeline |
| Old Westbury Municipal |
| High Yield Municipal |
Old Westbury and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and High Yield
The main advantage of trading using opposite Old Westbury and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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