Correlation Between Westwood Opportunistic and Westwood Strategic
Can any of the company-specific risk be diversified away by investing in both Westwood Opportunistic and Westwood Strategic 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 Strategic 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 Strategic Global, you can compare the effects of market volatilities on Westwood Opportunistic and Westwood Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Opportunistic and Westwood Strategic.
Diversification Opportunities for Westwood Opportunistic and Westwood Strategic
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 Strategic Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Strategic Global 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Strategic Global has no effect on the direction of Westwood Opportunistic i.e., Westwood Opportunistic and Westwood Strategic go up and down completely randomly.
Pair Corralation between Westwood Opportunistic and Westwood Strategic
If you would invest (100.00) in Westwood Strategic Global on November 29, 2024 and sell it today you would earn a total of 100.00 from holding Westwood Strategic Global 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 Strategic Global
Performance |
| Timeline |
| Westwood Opportunistic |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Westwood Strategic Global |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Westwood Opportunistic and Westwood Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Opportunistic and Westwood Strategic
The main advantage of trading using opposite Westwood Opportunistic and Westwood Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Opportunistic position performs unexpectedly, Westwood Strategic 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 Strategic will offset losses from the drop in Westwood Strategic's long position.The idea behind Westwood Opportunistic High and Westwood Strategic Global 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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