Correlation Between Old Westbury and Franklin New
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Franklin New 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 Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury New and Franklin New York, you can compare the effects of market volatilities on Old Westbury and Franklin New 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 Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Franklin New.
Diversification Opportunities for Old Westbury and Franklin New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Old and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury New and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York 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 New are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Old Westbury i.e., Old Westbury and Franklin New go up and down completely randomly.
Pair Corralation between Old Westbury and Franklin New
Assuming the 90 days horizon Old Westbury is expected to generate 1.46 times less return on investment than Franklin New. But when comparing it to its historical volatility, Old Westbury New is 1.11 times less risky than Franklin New. It trades about 0.11 of its potential returns per unit of risk. Franklin New York is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,073 in Franklin New York on August 24, 2024 and sell it today you would earn a total of 8.00 from holding Franklin New York or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury New vs. Franklin New York
Performance |
| Timeline |
| Old Westbury New |
| Franklin New York |
Old Westbury and Franklin New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Franklin New
The main advantage of trading using opposite Old Westbury and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Franklin New 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 Franklin New will offset losses from the drop in Franklin New's long position.| Old Westbury vs. Allianzgi Convertible Income | Old Westbury vs. Fidelity Sai Convertible | Old Westbury vs. Advent Claymore Convertible | Old Westbury vs. Virtus Convertible |
| Franklin New vs. Victory Rs Partners | Franklin New vs. Mutual Of America | Franklin New vs. Fpa Queens Road | Franklin New vs. Valic Company I |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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