Correlation Between Westwood Opportunistic and Westwood Low
Can any of the company-specific risk be diversified away by investing in both Westwood Opportunistic and Westwood Low 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 Opportunistic and Westwood Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Opportunistic High and Westwood Low Volatility, you can compare the effects of market volatilities on Westwood Opportunistic and Westwood Low 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 Opportunistic with a short position of Westwood Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Opportunistic and Westwood Low.
Diversification Opportunities for Westwood Opportunistic and Westwood Low
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westwood and Westwood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Opportunistic High and Westwood Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Low Volatility and Westwood Opportunistic 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 Opportunistic High are associated (or correlated) with Westwood Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Low Volatility has no effect on the direction of Westwood Opportunistic i.e., Westwood Opportunistic and Westwood Low go up and down completely randomly.
Pair Corralation between Westwood Opportunistic and Westwood Low
If you would invest (100.00) in Westwood Low Volatility on November 29, 2024 and sell it today you would earn a total of 100.00 from holding Westwood Low Volatility or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Opportunistic High vs. Westwood Low Volatility
Performance |
| Timeline |
| Westwood Opportunistic |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Westwood Low Volatility |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Westwood Opportunistic and Westwood Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Opportunistic and Westwood Low
The main advantage of trading using opposite Westwood Opportunistic and Westwood Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Opportunistic position performs unexpectedly, Westwood Low 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 Low will offset losses from the drop in Westwood Low's long position.The idea behind Westwood Opportunistic High and Westwood Low Volatility pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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