Correlation Between Old Westbury and New World
Can any of the company-specific risk be diversified away by investing in both Old Westbury and New World 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 New World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Small and New World Fund, you can compare the effects of market volatilities on Old Westbury and New World 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 New World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and New World.
Diversification Opportunities for Old Westbury and New World
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Old and New is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Small and New World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New World 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 Small are associated (or correlated) with New World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New World Fund has no effect on the direction of Old Westbury i.e., Old Westbury and New World go up and down completely randomly.
Pair Corralation between Old Westbury and New World
Assuming the 90 days horizon Old Westbury Small is expected to generate 1.15 times more return on investment than New World. However, Old Westbury is 1.15 times more volatile than New World Fund. It trades about 0.08 of its potential returns per unit of risk. New World Fund is currently generating about 0.07 per unit of risk. If you would invest 1,437 in Old Westbury Small on September 12, 2024 and sell it today you would earn a total of 303.00 from holding Old Westbury Small or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Small vs. New World Fund
Performance |
| Timeline |
| Old Westbury Small |
| New World Fund |
Old Westbury and New World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and New World
The main advantage of trading using opposite Old Westbury and New World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, New World 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 New World will offset losses from the drop in New World's long position.| Old Westbury vs. Msift High Yield | Old Westbury vs. T Rowe Price | Old Westbury vs. Payden High Income | Old Westbury vs. Siit High Yield |
| New World vs. Old Westbury Small | New World vs. Kinetics Small Cap | New World vs. Pace Smallmedium Value | New World vs. Small Pany Growth |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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