Correlation Between Old Westbury and Brandes International
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Brandes International 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 Brandes International 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 Brandes International Small, you can compare the effects of market volatilities on Old Westbury and Brandes International 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 Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Brandes International.
Diversification Opportunities for Old Westbury and Brandes International
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and Brandes is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International 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 Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of Old Westbury i.e., Old Westbury and Brandes International go up and down completely randomly.
Pair Corralation between Old Westbury and Brandes International
Assuming the 90 days horizon Old Westbury is expected to generate 11.8 times less return on investment than Brandes International. But when comparing it to its historical volatility, Old Westbury Short Term is 9.78 times less risky than Brandes International. It trades about 0.28 of its potential returns per unit of risk. Brandes International Small is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,822 in Brandes International Small on November 28, 2024 and sell it today you would earn a total of 86.00 from holding Brandes International Small or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Short Term vs. Brandes International Small
Performance |
| Timeline |
| Old Westbury Short |
| Brandes International |
Old Westbury and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Brandes International
The main advantage of trading using opposite Old Westbury and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Brandes International 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 Brandes International will offset losses from the drop in Brandes International's long position.| Old Westbury vs. Lord Abbett Diversified | Old Westbury vs. Elfun Diversified Fund | Old Westbury vs. Fulcrum Diversified Absolute | Old Westbury vs. Global Diversified Income |
| Brandes International vs. Ultra Short Fixed Income | Brandes International vs. T Rowe Price | Brandes International vs. Qs International Equity | Brandes International vs. Artisan Select Equity |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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