Correlation Between Old Westbury and American Funds
Can any of the company-specific risk be diversified away by investing in both Old Westbury and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Short Term and American Funds Strategic, you can compare the effects of market volatilities on Old Westbury and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and American Funds.
Diversification Opportunities for Old Westbury and American Funds
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and American Funds Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Strategic 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 Short Term are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Strategic has no effect on the direction of Old Westbury i.e., Old Westbury and American Funds go up and down completely randomly.
Pair Corralation between Old Westbury and American Funds
Assuming the 90 days horizon Old Westbury Short Term is expected to generate 0.29 times more return on investment than American Funds. However, Old Westbury Short Term is 3.44 times less risky than American Funds. It trades about -0.05 of its potential returns per unit of risk. American Funds Strategic is currently generating about -0.18 per unit of risk. If you would invest 1,014 in Old Westbury Short Term on August 24, 2024 and sell it today you would lose (1.00) from holding Old Westbury Short Term or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Old Westbury Short Term vs. American Funds Strategic
Performance |
| Timeline |
| Old Westbury Short |
| American Funds Strategic |
Old Westbury and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and American Funds
The main advantage of trading using opposite Old Westbury and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Old Westbury vs. Barings Global Floating | Old Westbury vs. Wisdomtree Siegel Global | Old Westbury vs. Morgan Stanley Global | Old Westbury vs. T Rowe Price |
| American Funds vs. Rational Strategic Allocation | American Funds vs. T Rowe Price | American Funds vs. Legg Mason Bw | American Funds vs. Touchstone Large Cap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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