Correlation Between Westwood Smallcap and Westwood Smidcap
Can any of the company-specific risk be diversified away by investing in both Westwood Smallcap and Westwood Smidcap 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 Westwood Smidcap 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 Westwood Smidcap Fund, you can compare the effects of market volatilities on Westwood Smallcap and Westwood Smidcap 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 Westwood Smidcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Smallcap and Westwood Smidcap.
Diversification Opportunities for Westwood Smallcap and Westwood Smidcap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Westwood and Westwood is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Smallcap Value and Westwood Smidcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Smidcap 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 Westwood Smidcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Smidcap has no effect on the direction of Westwood Smallcap i.e., Westwood Smallcap and Westwood Smidcap go up and down completely randomly.
Pair Corralation between Westwood Smallcap and Westwood Smidcap
Assuming the 90 days horizon Westwood Smallcap is expected to generate 1.33 times less return on investment than Westwood Smidcap. In addition to that, Westwood Smallcap is 1.15 times more volatile than Westwood Smidcap Fund. It trades about 0.05 of its total potential returns per unit of risk. Westwood Smidcap Fund is currently generating about 0.08 per unit of volatility. If you would invest 1,308 in Westwood Smidcap Fund on August 31, 2024 and sell it today you would earn a total of 433.00 from holding Westwood Smidcap Fund or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Smallcap Value vs. Westwood Smidcap Fund
Performance |
| Timeline |
| Westwood Smallcap Value |
| Westwood Smidcap |
Westwood Smallcap and Westwood Smidcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Smallcap and Westwood Smidcap
The main advantage of trading using opposite Westwood Smallcap and Westwood Smidcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Smallcap position performs unexpectedly, Westwood Smidcap 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 Smidcap will offset losses from the drop in Westwood Smidcap'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 |
| Westwood Smidcap vs. Oklahoma Municipal Fund | Westwood Smidcap vs. Bbh Intermediate Municipal | Westwood Smidcap vs. Federated Ohio Municipal | Westwood Smidcap vs. Legg Mason Partners |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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