Correlation Between Old Westbury and City National
Can any of the company-specific risk be diversified away by investing in both Old Westbury and City National 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 City National 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 City National Rochdale, you can compare the effects of market volatilities on Old Westbury and City National 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 City National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and City National.
Diversification Opportunities for Old Westbury and City National
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Old and City is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and City National Rochdale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City National Rochdale 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 City National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City National Rochdale has no effect on the direction of Old Westbury i.e., Old Westbury and City National go up and down completely randomly.
Pair Corralation between Old Westbury and City National
Assuming the 90 days horizon Old Westbury is expected to generate 6.11 times less return on investment than City National. But when comparing it to its historical volatility, Old Westbury Municipal is 5.34 times less risky than City National. It trades about 0.07 of its potential returns per unit of risk. City National Rochdale is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,165 in City National Rochdale on September 12, 2024 and sell it today you would earn a total of 812.00 from holding City National Rochdale or generate 37.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Old Westbury Municipal vs. City National Rochdale
Performance |
| Timeline |
| Old Westbury Municipal |
| City National Rochdale |
Old Westbury and City National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and City National
The main advantage of trading using opposite Old Westbury and City National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, City National 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 City National will offset losses from the drop in City National's long position.| Old Westbury vs. Royce Global Financial | Old Westbury vs. Gabelli Global Financial | Old Westbury vs. Mesirow Financial Small | Old Westbury vs. Financials Ultrasector Profund |
| City National vs. Pace Municipal Fixed | City National vs. Old Westbury Municipal | City National vs. Morningstar Municipal Bond | City National vs. Franklin High Yield |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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