Correlation Between Westwood Largecap and Amana Developing
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and Amana Developing 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 Largecap and Amana Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Largecap Value and Amana Developing World, you can compare the effects of market volatilities on Westwood Largecap and Amana Developing 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 Largecap with a short position of Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Amana Developing.
Diversification Opportunities for Westwood Largecap and Amana Developing
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westwood and Amana is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World and Westwood Largecap 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 Largecap Value are associated (or correlated) with Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Amana Developing go up and down completely randomly.
Pair Corralation between Westwood Largecap and Amana Developing
Assuming the 90 days horizon Westwood Largecap Value is expected to generate 0.72 times more return on investment than Amana Developing. However, Westwood Largecap Value is 1.38 times less risky than Amana Developing. It trades about 0.1 of its potential returns per unit of risk. Amana Developing World is currently generating about 0.06 per unit of risk. If you would invest 1,306 in Westwood Largecap Value on September 12, 2024 and sell it today you would earn a total of 209.00 from holding Westwood Largecap Value or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Largecap Value vs. Amana Developing World
Performance |
| Timeline |
| Westwood Largecap Value |
| Amana Developing World |
Westwood Largecap and Amana Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and Amana Developing
The main advantage of trading using opposite Westwood Largecap and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.| Westwood Largecap vs. Sp Smallcap 600 | Westwood Largecap vs. Scout Small Cap | Westwood Largecap vs. Df Dent Small | Westwood Largecap vs. Small Pany Growth |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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