Correlation Between Westwood Smallcap and Berwyn Income
Can any of the company-specific risk be diversified away by investing in both Westwood Smallcap and Berwyn 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 Smallcap and Berwyn Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Smallcap Value and Berwyn Income Fund, you can compare the effects of market volatilities on Westwood Smallcap and Berwyn 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 Smallcap with a short position of Berwyn Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Smallcap and Berwyn Income.
Diversification Opportunities for Westwood Smallcap and Berwyn Income
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Westwood and Berwyn is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Smallcap Value and Berwyn Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berwyn Income and Westwood Smallcap 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 Smallcap Value are associated (or correlated) with Berwyn Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berwyn Income has no effect on the direction of Westwood Smallcap i.e., Westwood Smallcap and Berwyn Income go up and down completely randomly.
Pair Corralation between Westwood Smallcap and Berwyn Income
Assuming the 90 days horizon Westwood Smallcap Value is expected to generate 4.87 times more return on investment than Berwyn Income. However, Westwood Smallcap is 4.87 times more volatile than Berwyn Income Fund. It trades about 0.11 of its potential returns per unit of risk. Berwyn Income Fund is currently generating about 0.11 per unit of risk. If you would invest 2,154 in Westwood Smallcap Value on August 31, 2024 and sell it today you would earn a total of 181.00 from holding Westwood Smallcap Value or generate 8.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Smallcap Value vs. Berwyn Income Fund
Performance |
| Timeline |
| Westwood Smallcap Value |
| Berwyn Income |
Westwood Smallcap and Berwyn Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Smallcap and Berwyn Income
The main advantage of trading using opposite Westwood Smallcap and Berwyn Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Smallcap position performs unexpectedly, Berwyn 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 Berwyn Income will offset losses from the drop in Berwyn Income's long position.| Westwood Smallcap vs. Westwood Smidcap Fund | Westwood Smallcap vs. Westwood Income Opportunity | Westwood Smallcap vs. Westwood Largecap Value | Westwood Smallcap vs. Invesco DWA Healthcare |
| Berwyn Income vs. Virtus Convertible | Berwyn Income vs. Columbia Vertible Securities | Berwyn Income vs. Advent Claymore Convertible | Berwyn Income vs. Absolute Convertible Arbitrage |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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