Correlation Between Westwood Smidcap and Westwood Income
Can any of the company-specific risk be diversified away by investing in both Westwood Smidcap and Westwood Income 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 Smidcap and Westwood Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Smidcap Fund and Westwood Income Opportunity, you can compare the effects of market volatilities on Westwood Smidcap and Westwood Income 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 Smidcap with a short position of Westwood Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Smidcap and Westwood Income.
Diversification Opportunities for Westwood Smidcap and Westwood Income
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westwood and Westwood is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Smidcap Fund and Westwood Income Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Income Oppo and Westwood Smidcap 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 Smidcap Fund are associated (or correlated) with Westwood Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Income Oppo has no effect on the direction of Westwood Smidcap i.e., Westwood Smidcap and Westwood Income go up and down completely randomly.
Pair Corralation between Westwood Smidcap and Westwood Income
Assuming the 90 days horizon Westwood Smidcap is expected to generate 1.49 times less return on investment than Westwood Income. In addition to that, Westwood Smidcap is 2.99 times more volatile than Westwood Income Opportunity. It trades about 0.19 of its total potential returns per unit of risk. Westwood Income Opportunity is currently generating about 0.82 per unit of volatility. If you would invest 1,215 in Westwood Income Opportunity on November 9, 2024 and sell it today you would earn a total of 13.00 from holding Westwood Income Opportunity or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 20.0% |
| Values | Daily Returns |
Westwood Smidcap Fund vs. Westwood Income Opportunity
Performance |
| Timeline |
| Westwood Smidcap |
| Westwood Income Oppo |
Risk-Adjusted Performance
Insignificant
Weak | Strong |
Westwood Smidcap and Westwood Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Smidcap and Westwood Income
The main advantage of trading using opposite Westwood Smidcap and Westwood Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Smidcap position performs unexpectedly, Westwood Income 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 Income will offset losses from the drop in Westwood Income's long position.| Westwood Smidcap vs. Rational Special Situations | Westwood Smidcap vs. Gmo High Yield | Westwood Smidcap vs. Old Westbury Fixed | Westwood Smidcap vs. Bbh Intermediate Municipal |
| Westwood Income vs. Bbh Partner Fund | Westwood Income vs. Rbc Funds Trust | Westwood Income vs. Aqr Diversified Arbitrage | Westwood Income vs. Transamerica Funds |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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