Correlation Between Westcore Municipal and Westcore Small
Can any of the company-specific risk be diversified away by investing in both Westcore Municipal and Westcore Small 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 Westcore Municipal and Westcore Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westcore Municipal Opportunities and Westcore Small Cap Growth, you can compare the effects of market volatilities on Westcore Municipal and Westcore Small 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 Westcore Municipal with a short position of Westcore Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westcore Municipal and Westcore Small.
Diversification Opportunities for Westcore Municipal and Westcore Small
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westcore and Westcore is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Westcore Municipal Opportuniti and Westcore Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Small Cap and Westcore Municipal 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 Westcore Municipal Opportunities are associated (or correlated) with Westcore Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Small Cap has no effect on the direction of Westcore Municipal i.e., Westcore Municipal and Westcore Small go up and down completely randomly.
Pair Corralation between Westcore Municipal and Westcore Small
Assuming the 90 days horizon Westcore Municipal is expected to generate 5.6 times less return on investment than Westcore Small. But when comparing it to its historical volatility, Westcore Municipal Opportunities is 7.93 times less risky than Westcore Small. It trades about 0.19 of its potential returns per unit of risk. Westcore Small Cap Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,943 in Westcore Small Cap Growth on September 1, 2024 and sell it today you would earn a total of 434.00 from holding Westcore Small Cap Growth or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westcore Municipal Opportuniti vs. Westcore Small Cap Growth
Performance |
| Timeline |
| Westcore Municipal |
| Westcore Small Cap |
Westcore Municipal and Westcore Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westcore Municipal and Westcore Small
The main advantage of trading using opposite Westcore Municipal and Westcore Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westcore Municipal position performs unexpectedly, Westcore Small 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 Westcore Small will offset losses from the drop in Westcore Small's long position.| Westcore Municipal vs. Segall Bryant Hamill | Westcore Municipal vs. Segall Bryant Hamill | Westcore Municipal vs. Segall Bryant Hamill | Westcore Municipal vs. Segall Bryant Hamill |
| Westcore Small vs. Segall Bryant Hamill | Westcore Small vs. Segall Bryant Hamill | Westcore Small vs. Segall Bryant Hamill | Westcore Small vs. Segall Bryant Hamill |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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