Correlation Between Westwood Largecap and Goodhaven Fund
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and Goodhaven Fund 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 Goodhaven Fund 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 Goodhaven Fund Goodhaven, you can compare the effects of market volatilities on Westwood Largecap and Goodhaven Fund 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 Goodhaven Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Goodhaven Fund.
Diversification Opportunities for Westwood Largecap and Goodhaven Fund
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Westwood and Goodhaven is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Goodhaven Fund Goodhaven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodhaven Fund Goodhaven 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 Goodhaven Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodhaven Fund Goodhaven has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Goodhaven Fund go up and down completely randomly.
Pair Corralation between Westwood Largecap and Goodhaven Fund
Assuming the 90 days horizon Westwood Largecap is expected to generate 2.62 times less return on investment than Goodhaven Fund. In addition to that, Westwood Largecap is 1.08 times more volatile than Goodhaven Fund Goodhaven. It trades about 0.05 of its total potential returns per unit of risk. Goodhaven Fund Goodhaven is currently generating about 0.13 per unit of volatility. If you would invest 4,210 in Goodhaven Fund Goodhaven on September 14, 2024 and sell it today you would earn a total of 1,010 from holding Goodhaven Fund Goodhaven or generate 23.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Westwood Largecap Value vs. Goodhaven Fund Goodhaven
Performance |
| Timeline |
| Westwood Largecap Value |
| Goodhaven Fund Goodhaven |
Westwood Largecap and Goodhaven Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and Goodhaven Fund
The main advantage of trading using opposite Westwood Largecap and Goodhaven Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, Goodhaven Fund 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 Goodhaven Fund will offset losses from the drop in Goodhaven Fund's long position.| Westwood Largecap vs. International Investors Gold | Westwood Largecap vs. James Balanced Golden | Westwood Largecap vs. Fidelity Advisor Gold | Westwood Largecap vs. Global Gold Fund |
| Goodhaven Fund vs. 1290 High Yield | Goodhaven Fund vs. Blackrock Balanced Capital | Goodhaven Fund vs. Lord Abbett High | Goodhaven Fund vs. Westwood Largecap Value |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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