Correlation Between Old Westbury and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Blue Chip 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 Blue Chip 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 Blue Chip Fund, you can compare the effects of market volatilities on Old Westbury and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Blue Chip.
Diversification Opportunities for Old Westbury and Blue Chip
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Old and Blue is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Fund 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Old Westbury i.e., Old Westbury and Blue Chip go up and down completely randomly.
Pair Corralation between Old Westbury and Blue Chip
Assuming the 90 days horizon Old Westbury is expected to generate 17.34 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Old Westbury Short Term is 7.32 times less risky than Blue Chip. It trades about 0.15 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,515 in Blue Chip Fund on September 1, 2024 and sell it today you would earn a total of 331.00 from holding Blue Chip Fund or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Old Westbury Short Term vs. Blue Chip Fund
Performance |
| Timeline |
| Old Westbury Short |
| Blue Chip Fund |
Old Westbury and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Blue Chip
The main advantage of trading using opposite Old Westbury and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip's long position.The idea behind Old Westbury Short Term and Blue Chip Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management | Blue Chip vs. Strategic Asset Management |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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