Correlation Between Westwood Income and Blackrock Moderate
Can any of the company-specific risk be diversified away by investing in both Westwood Income and Blackrock Moderate 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 Income and Blackrock Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Income Opportunity and Blackrock Moderate Prepared, you can compare the effects of market volatilities on Westwood Income and Blackrock Moderate 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 Income with a short position of Blackrock Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Income and Blackrock Moderate.
Diversification Opportunities for Westwood Income and Blackrock Moderate
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westwood and Blackrock is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Income Opportunity and Blackrock Moderate Prepared in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Moderate and Westwood Income 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 Income Opportunity are associated (or correlated) with Blackrock Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Moderate has no effect on the direction of Westwood Income i.e., Westwood Income and Blackrock Moderate go up and down completely randomly.
Pair Corralation between Westwood Income and Blackrock Moderate
Assuming the 90 days horizon Westwood Income Opportunity is expected to generate 1.17 times more return on investment than Blackrock Moderate. However, Westwood Income is 1.17 times more volatile than Blackrock Moderate Prepared. It trades about 0.31 of its potential returns per unit of risk. Blackrock Moderate Prepared is currently generating about 0.16 per unit of risk. If you would invest 1,209 in Westwood Income Opportunity on August 31, 2024 and sell it today you would earn a total of 36.00 from holding Westwood Income Opportunity or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Income Opportunity vs. Blackrock Moderate Prepared
Performance |
| Timeline |
| Westwood Income Oppo |
| Blackrock Moderate |
Westwood Income and Blackrock Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Income and Blackrock Moderate
The main advantage of trading using opposite Westwood Income and Blackrock Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Income position performs unexpectedly, Blackrock Moderate 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 Blackrock Moderate will offset losses from the drop in Blackrock Moderate's long position.| Westwood Income vs. Berwyn Income Fund | Westwood Income vs. Fpa Crescent Fund | Westwood Income vs. James Balanced Golden | Westwood Income vs. Westwood Largecap Value |
| Blackrock Moderate vs. Westwood Income Opportunity | Blackrock Moderate vs. First Eagle Global | Blackrock Moderate vs. Berwyn Income Fund | Blackrock Moderate vs. Fpa Crescent Fund |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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