Correlation Between Old Westbury and Northern Small
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Northern Small 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 Northern Small 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 Northern Small Cap, you can compare the effects of market volatilities on Old Westbury and Northern Small 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 Northern Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Northern Small.
Diversification Opportunities for Old Westbury and Northern Small
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Northern is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Northern Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Small Cap 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 Northern Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Small Cap has no effect on the direction of Old Westbury i.e., Old Westbury and Northern Small go up and down completely randomly.
Pair Corralation between Old Westbury and Northern Small
Assuming the 90 days horizon Old Westbury is expected to generate 10.94 times less return on investment than Northern Small. But when comparing it to its historical volatility, Old Westbury Municipal is 6.17 times less risky than Northern Small. It trades about 0.09 of its potential returns per unit of risk. Northern Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,401 in Northern Small Cap on October 28, 2024 and sell it today you would earn a total of 40.00 from holding Northern Small Cap or generate 2.86% 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. Northern Small Cap
Performance |
| Timeline |
| Old Westbury Municipal |
| Northern Small Cap |
Old Westbury and Northern Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Northern Small
The main advantage of trading using opposite Old Westbury and Northern Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Northern Small 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 Northern Small will offset losses from the drop in Northern Small's long position.| Old Westbury vs. International Investors Gold | Old Westbury vs. Goldman Sachs Strategic | Old Westbury vs. Wells Fargo Advantage | Old Westbury vs. Deutsche Gold Precious |
| Northern Small vs. Fidelity Sai Convertible | Northern Small vs. Calamos Dynamic Convertible | Northern Small vs. Lord Abbett Convertible | Northern Small vs. Advent Claymore Convertible |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |