Correlation Between Westwood Short and Westwood Alternative
Can any of the company-specific risk be diversified away by investing in both Westwood Short and Westwood Alternative 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 Short and Westwood Alternative into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Short Duration and Westwood Alternative Income, you can compare the effects of market volatilities on Westwood Short and Westwood Alternative 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 Short with a short position of Westwood Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Short and Westwood Alternative.
Diversification Opportunities for Westwood Short and Westwood Alternative
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westwood and Westwood is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Short Duration and Westwood Alternative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Alternative and Westwood Short 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 Short Duration are associated (or correlated) with Westwood Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Alternative has no effect on the direction of Westwood Short i.e., Westwood Short and Westwood Alternative go up and down completely randomly.
Pair Corralation between Westwood Short and Westwood Alternative
Assuming the 90 days horizon Westwood Short Duration is expected to generate 4.96 times more return on investment than Westwood Alternative. However, Westwood Short is 4.96 times more volatile than Westwood Alternative Income. It trades about 0.29 of its potential returns per unit of risk. Westwood Alternative Income is currently generating about 0.21 per unit of risk. If you would invest 1,002 in Westwood Short Duration on August 28, 2024 and sell it today you would earn a total of 20.00 from holding Westwood Short Duration or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westwood Short Duration vs. Westwood Alternative Income
Performance |
| Timeline |
| Westwood Short Duration |
| Westwood Alternative |
Westwood Short and Westwood Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Short and Westwood Alternative
The main advantage of trading using opposite Westwood Short and Westwood Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Short position performs unexpectedly, Westwood Alternative 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 Alternative will offset losses from the drop in Westwood Alternative's long position.| Westwood Short vs. Franklin Growth Opportunities | Westwood Short vs. Growth Fund Of | Westwood Short vs. Small Pany Growth | Westwood Short vs. Victory Rs Growth |
| Westwood Alternative vs. Westwood Short Duration | Westwood Alternative vs. Westwood High Income | Westwood Alternative vs. Westwood Income Opportunity | Westwood Alternative vs. Westwood Income Opportunity |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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