Correlation Between Short Oil and Westwood Alternative
Can any of the company-specific risk be diversified away by investing in both Short Oil and Westwood Alternative 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 Short Oil and Westwood Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Oil Gas and Westwood Alternative Income, you can compare the effects of market volatilities on Short Oil and Westwood Alternative 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 Short Oil with a short position of Westwood Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Oil and Westwood Alternative.
Diversification Opportunities for Short Oil and Westwood Alternative
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Short and Westwood is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Short Oil Gas and Westwood Alternative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Alternative and Short Oil 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 Short Oil Gas are associated (or correlated) with Westwood Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Alternative has no effect on the direction of Short Oil i.e., Short Oil and Westwood Alternative go up and down completely randomly.
Pair Corralation between Short Oil and Westwood Alternative
Assuming the 90 days horizon Short Oil Gas is expected to generate 22.08 times more return on investment than Westwood Alternative. However, Short Oil is 22.08 times more volatile than Westwood Alternative Income. It trades about 0.02 of its potential returns per unit of risk. Westwood Alternative Income is currently generating about 0.3 per unit of risk. If you would invest 1,387 in Short Oil Gas on November 29, 2024 and sell it today you would earn a total of 7.00 from holding Short Oil Gas or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 52.38% |
| Values | Daily Returns |
Short Oil Gas vs. Westwood Alternative Income
Performance |
| Timeline |
| Short Oil Gas |
| Westwood Alternative |
Risk-Adjusted Performance
Good
Weak | Strong |
Short Oil and Westwood Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Oil and Westwood Alternative
The main advantage of trading using opposite Short Oil and Westwood Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Oil position performs unexpectedly, Westwood Alternative 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 Westwood Alternative will offset losses from the drop in Westwood Alternative's long position.| Short Oil vs. Guidemark E Fixed | Short Oil vs. Arrow Managed Futures | Short Oil vs. Intal High Relative | Short Oil vs. T Rowe Price |
| Westwood Alternative vs. Access Flex High | Westwood Alternative vs. Aqr Risk Parity | Westwood Alternative vs. Ab High Income | Westwood Alternative vs. Siit High Yield |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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