Correlation Between Westwood Quality and Gold
Can any of the company-specific risk be diversified away by investing in both Westwood Quality and Gold 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 Westwood Quality and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Quality Smallcap and Gold And Precious, you can compare the effects of market volatilities on Westwood Quality and Gold 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 Westwood Quality with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Quality and Gold.
Diversification Opportunities for Westwood Quality and Gold
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Westwood and Gold is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Quality Smallcap and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Westwood Quality 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 Westwood Quality Smallcap are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Westwood Quality i.e., Westwood Quality and Gold go up and down completely randomly.
Pair Corralation between Westwood Quality and Gold
Assuming the 90 days horizon Westwood Quality Smallcap is expected to generate 0.71 times more return on investment than Gold. However, Westwood Quality Smallcap is 1.41 times less risky than Gold. It trades about 0.11 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.05 per unit of risk. If you would invest 2,147 in Westwood Quality Smallcap on September 2, 2024 and sell it today you would earn a total of 186.00 from holding Westwood Quality Smallcap or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Quality Smallcap vs. Gold And Precious
Performance |
| Timeline |
| Westwood Quality Smallcap |
| Gold And Precious |
Westwood Quality and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Quality and Gold
The main advantage of trading using opposite Westwood Quality and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Quality position performs unexpectedly, Gold 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 Gold will offset losses from the drop in Gold's long position.| Westwood Quality vs. Westwood Smidcap Fund | Westwood Quality vs. Westwood Income Opportunity | Westwood Quality vs. Westwood Largecap Value | Westwood Quality vs. Invesco DWA Healthcare |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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