Correlation Between Westwood Largecap and International Equity
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and International Equity 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 International Equity 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 International Equity Fund, you can compare the effects of market volatilities on Westwood Largecap and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and International Equity.
Diversification Opportunities for Westwood Largecap and International Equity
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Westwood and International is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and International Equity go up and down completely randomly.
Pair Corralation between Westwood Largecap and International Equity
Assuming the 90 days horizon Westwood Largecap Value is expected to generate 1.01 times more return on investment than International Equity. However, Westwood Largecap is 1.01 times more volatile than International Equity Fund. It trades about 0.32 of its potential returns per unit of risk. International Equity Fund is currently generating about -0.07 per unit of risk. If you would invest 1,465 in Westwood Largecap Value on September 3, 2024 and sell it today you would earn a total of 85.00 from holding Westwood Largecap Value or generate 5.8% 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. International Equity Fund
Performance |
| Timeline |
| Westwood Largecap Value |
| International Equity |
Westwood Largecap and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and International Equity
The main advantage of trading using opposite Westwood Largecap and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Westwood Largecap vs. Ab Bond Inflation | Westwood Largecap vs. Arrow Managed Futures | Westwood Largecap vs. Lord Abbett Inflation | Westwood Largecap vs. Guidepath Managed Futures |
| International Equity vs. Touchstone Premium Yield | International Equity vs. Transamerica Funds | International Equity vs. Artisan High Income | International Equity vs. Bbh Intermediate Municipal |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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