Correlation Between Old Westbury and Growth Income
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Growth Income 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 Growth Income 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 Growth Income Fund, you can compare the effects of market volatilities on Old Westbury and Growth Income 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 Growth Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Growth Income.
Diversification Opportunities for Old Westbury and Growth Income
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Growth is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Short Term and Growth Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Income 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 Growth Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Income has no effect on the direction of Old Westbury i.e., Old Westbury and Growth Income go up and down completely randomly.
Pair Corralation between Old Westbury and Growth Income
Assuming the 90 days horizon Old Westbury is expected to generate 4.73 times less return on investment than Growth Income. But when comparing it to its historical volatility, Old Westbury Short Term is 7.95 times less risky than Growth Income. It trades about 0.23 of its potential returns per unit of risk. Growth Income Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,469 in Growth Income Fund on November 18, 2024 and sell it today you would earn a total of 64.00 from holding Growth Income Fund or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Short Term vs. Growth Income Fund
Performance |
| Timeline |
| Old Westbury Short |
| Growth Income |
Old Westbury and Growth Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Growth Income
The main advantage of trading using opposite Old Westbury and Growth Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Growth Income 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 Growth Income will offset losses from the drop in Growth Income's long position.| Old Westbury vs. Tax Managed International Equity | Old Westbury vs. Artisan Select Equity | Old Westbury vs. T Rowe Price | Old Westbury vs. Doubleline Core Fixed |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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