Correlation Between Old Westbury and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Federated Mdt 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 Mdt 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 Mdt All, you can compare the effects of market volatilities on Old Westbury and Federated Mdt 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 Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Federated Mdt.
Diversification Opportunities for Old Westbury and Federated Mdt
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Federated is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Federated Mdt All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt All 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 Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt All has no effect on the direction of Old Westbury i.e., Old Westbury and Federated Mdt go up and down completely randomly.
Pair Corralation between Old Westbury and Federated Mdt
Assuming the 90 days horizon Old Westbury is expected to generate 8.3 times less return on investment than Federated Mdt. But when comparing it to its historical volatility, Old Westbury Municipal is 5.94 times less risky than Federated Mdt. It trades about 0.02 of its potential returns per unit of risk. Federated Mdt All is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,403 in Federated Mdt All on October 7, 2024 and sell it today you would earn a total of 135.00 from holding Federated Mdt All or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Municipal vs. Federated Mdt All
Performance |
| Timeline |
| Old Westbury Municipal |
| Federated Mdt All |
Old Westbury and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Federated Mdt
The main advantage of trading using opposite Old Westbury and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Federated Mdt 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 Mdt will offset losses from the drop in Federated Mdt's long position.| Old Westbury vs. Principal Fds Money | Old Westbury vs. Ab Government Exchange | Old Westbury vs. Pioneer Money Market | Old Westbury vs. Putnam Money Market |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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