Correlation Between Smead Value and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Smead Value and Old Westbury 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 Smead Value and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead Value Fund and Old Westbury Large, you can compare the effects of market volatilities on Smead Value and Old Westbury 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 Smead Value with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Old Westbury.
Diversification Opportunities for Smead Value and Old Westbury
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and Old is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Smead Value 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 Smead Value Fund are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Smead Value i.e., Smead Value and Old Westbury go up and down completely randomly.
Pair Corralation between Smead Value and Old Westbury
Assuming the 90 days horizon Smead Value is expected to generate 1.12 times less return on investment than Old Westbury. In addition to that, Smead Value is 1.18 times more volatile than Old Westbury Large. It trades about 0.09 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.12 per unit of volatility. If you would invest 2,091 in Old Westbury Large on August 27, 2024 and sell it today you would earn a total of 35.00 from holding Old Westbury Large or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. Old Westbury Large
Performance |
| Timeline |
| Smead Value Fund |
| Old Westbury Large |
Smead Value and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Old Westbury
The main advantage of trading using opposite Smead Value and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Smead Value vs. Oppenheimer International Growth | Smead Value vs. Aquagold International | Smead Value vs. Morningstar Unconstrained Allocation | Smead Value vs. Thrivent High Yield |
| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury California | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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