Correlation Between Old Westbury and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Federated Emerging 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 Federated Emerging 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 Federated Emerging Market, you can compare the effects of market volatilities on Old Westbury and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Federated Emerging.
Diversification Opportunities for Old Westbury and Federated Emerging
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Federated is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Old Westbury i.e., Old Westbury and Federated Emerging go up and down completely randomly.
Pair Corralation between Old Westbury and Federated Emerging
Assuming the 90 days horizon Old Westbury is expected to generate 3.52 times less return on investment than Federated Emerging. But when comparing it to its historical volatility, Old Westbury Municipal is 1.61 times less risky than Federated Emerging. It trades about 0.13 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 776.00 in Federated Emerging Market on November 2, 2024 and sell it today you would earn a total of 12.00 from holding Federated Emerging Market or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Municipal vs. Federated Emerging Market
Performance |
| Timeline |
| Old Westbury Municipal |
| Federated Emerging Market |
Old Westbury and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Federated Emerging
The main advantage of trading using opposite Old Westbury and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Federated Emerging 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Old Westbury vs. The Equity Growth | Old Westbury vs. T Rowe Price | Old Westbury vs. The Hartford Growth | Old Westbury vs. Eip Growth And |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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