Correlation Between Westwood Largecap and Aam Select
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and Aam Select 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 Aam Select 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 Aam Select Income, you can compare the effects of market volatilities on Westwood Largecap and Aam Select 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 Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Aam Select.
Diversification Opportunities for Westwood Largecap and Aam Select
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westwood and Aam is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income 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 Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Aam Select go up and down completely randomly.
Pair Corralation between Westwood Largecap and Aam Select
Assuming the 90 days horizon Westwood Largecap Value is expected to generate 1.75 times more return on investment than Aam Select. However, Westwood Largecap is 1.75 times more volatile than Aam Select Income. It trades about 0.06 of its potential returns per unit of risk. Aam Select Income is currently generating about 0.06 per unit of risk. If you would invest 1,266 in Westwood Largecap Value on September 2, 2024 and sell it today you would earn a total of 284.00 from holding Westwood Largecap Value or generate 22.43% 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. Aam Select Income
Performance |
| Timeline |
| Westwood Largecap Value |
| Aam Select Income |
Westwood Largecap and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and Aam Select
The main advantage of trading using opposite Westwood Largecap and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Westwood Largecap vs. Ultra Short Fixed Income | Westwood Largecap vs. Ms Global Fixed | Westwood Largecap vs. Multimedia Portfolio Multimedia | Westwood Largecap vs. Huber Capital Equity |
| Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aamhimco Short Duration | Aam Select vs. Aambahl Gaynor Income | Aam Select vs. Aam Select Income |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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