Correlation Between Old Westbury and Mid Capitalization
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Mid Capitalization 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 Mid Capitalization 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 Mid Capitalization Portfolio, you can compare the effects of market volatilities on Old Westbury and Mid Capitalization 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 Mid Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Mid Capitalization.
Diversification Opportunities for Old Westbury and Mid Capitalization
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Mid is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Mid Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Capitalization 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 Mid Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Capitalization has no effect on the direction of Old Westbury i.e., Old Westbury and Mid Capitalization go up and down completely randomly.
Pair Corralation between Old Westbury and Mid Capitalization
Assuming the 90 days horizon Old Westbury is expected to generate 2.36 times less return on investment than Mid Capitalization. But when comparing it to its historical volatility, Old Westbury Municipal is 9.41 times less risky than Mid Capitalization. It trades about 0.1 of its potential returns per unit of risk. Mid Capitalization Portfolio is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 747.00 in Mid Capitalization Portfolio on September 12, 2024 and sell it today you would earn a total of 64.00 from holding Mid Capitalization Portfolio or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Old Westbury Municipal vs. Mid Capitalization Portfolio
Performance |
| Timeline |
| Old Westbury Municipal |
| Mid Capitalization |
Old Westbury and Mid Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Mid Capitalization
The main advantage of trading using opposite Old Westbury and Mid Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Mid Capitalization 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 Mid Capitalization will offset losses from the drop in Mid Capitalization'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 |
| Mid Capitalization vs. T Rowe Price | Mid Capitalization vs. The National Tax Free | Mid Capitalization vs. Old Westbury Municipal | Mid Capitalization vs. Pace Municipal Fixed |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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