Correlation Between Wasatch Small and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Wasatch Small and Old Westbury 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 Wasatch Small and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Small Cap and Old Westbury Short Term, you can compare the effects of market volatilities on Wasatch Small and Old Westbury 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 Wasatch Small with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Small and Old Westbury.
Diversification Opportunities for Wasatch Small and Old Westbury
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wasatch and Old is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Small Cap and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short and Wasatch Small 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 Wasatch Small Cap are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Wasatch Small i.e., Wasatch Small and Old Westbury go up and down completely randomly.
Pair Corralation between Wasatch Small and Old Westbury
Assuming the 90 days horizon Wasatch Small Cap is expected to generate 18.81 times more return on investment than Old Westbury. However, Wasatch Small is 18.81 times more volatile than Old Westbury Short Term. It trades about 0.25 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about -0.05 per unit of risk. If you would invest 1,160 in Wasatch Small Cap on August 28, 2024 and sell it today you would earn a total of 106.00 from holding Wasatch Small Cap or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Small Cap vs. Old Westbury Short Term
Performance |
| Timeline |
| Wasatch Small Cap |
| Old Westbury Short |
Wasatch Small and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Small and Old Westbury
The main advantage of trading using opposite Wasatch Small and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Small position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Wasatch Small vs. Old Westbury Short Term | Wasatch Small vs. Jhancock Short Duration | Wasatch Small vs. Touchstone Ultra Short | Wasatch Small vs. Siit Ultra Short |
| Old Westbury vs. Rational Special Situations | Old Westbury vs. Ab Value Fund | Old Westbury vs. Balanced Fund Investor | Old Westbury vs. Eic Value Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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