Correlation Between Old Westbury and Prudential California
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Prudential California 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 Prudential California 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 Prudential California Muni, you can compare the effects of market volatilities on Old Westbury and Prudential California 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 Prudential California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Prudential California.
Diversification Opportunities for Old Westbury and Prudential California
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Prudential is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Prudential California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential California 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 Prudential California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential California has no effect on the direction of Old Westbury i.e., Old Westbury and Prudential California go up and down completely randomly.
Pair Corralation between Old Westbury and Prudential California
Assuming the 90 days horizon Old Westbury Municipal is expected to generate 1.33 times more return on investment than Prudential California. However, Old Westbury is 1.33 times more volatile than Prudential California Muni. It trades about 0.28 of its potential returns per unit of risk. Prudential California Muni is currently generating about 0.28 per unit of risk. If you would invest 1,141 in Old Westbury Municipal on November 9, 2024 and sell it today you would earn a total of 11.00 from holding Old Westbury Municipal or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Municipal vs. Prudential California Muni
Performance |
| Timeline |
| Old Westbury Municipal |
| Prudential California |
Old Westbury and Prudential California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Prudential California
The main advantage of trading using opposite Old Westbury and Prudential California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Prudential California 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 Prudential California will offset losses from the drop in Prudential California's long position.| Old Westbury vs. High Yield Fund | Old Westbury vs. Siit High Yield | Old Westbury vs. Lord Abbett Short | Old Westbury vs. Dunham High Yield |
| Prudential California vs. Short Real Estate | Prudential California vs. Nexpoint Real Estate | Prudential California vs. Dunham Real Estate | Prudential California vs. Cohen Steers Real |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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