Correlation Between Value Line and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both Value Line and Teton Westwood 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 Value Line and Teton Westwood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Line Income and Teton Westwood Small, you can compare the effects of market volatilities on Value Line and Teton Westwood 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 Value Line with a short position of Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Teton Westwood.
Diversification Opportunities for Value Line and Teton Westwood
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Value and Teton is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Income and Teton Westwood Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Small and Value Line 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 Value Line Income are associated (or correlated) with Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Small has no effect on the direction of Value Line i.e., Value Line and Teton Westwood go up and down completely randomly.
Pair Corralation between Value Line and Teton Westwood
Assuming the 90 days horizon Value Line is expected to generate 1.67 times less return on investment than Teton Westwood. But when comparing it to its historical volatility, Value Line Income is 1.78 times less risky than Teton Westwood. It trades about 0.26 of its potential returns per unit of risk. Teton Westwood Small is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,736 in Teton Westwood Small on August 27, 2024 and sell it today you would earn a total of 248.00 from holding Teton Westwood Small or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Line Income vs. Teton Westwood Small
Performance |
| Timeline |
| Value Line Income |
| Teton Westwood Small |
Value Line and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Line and Teton Westwood
The main advantage of trading using opposite Value Line and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Line position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood's long position.| Value Line vs. Value Line Asset | Value Line vs. Value Line Premier | Value Line vs. Value Line Mid | Value Line vs. Value Line Larger |
| Teton Westwood vs. The Gabelli Small | Teton Westwood vs. Teton Westwood Equity | Teton Westwood vs. The Gabelli Equity | Teton Westwood vs. Heartland Value Plus |
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 CEOs Directory module to screen CEOs from public companies around the world.
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