Correlation Between Western Assets and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Western Assets and Old Westbury 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 Western Assets and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Old Westbury Short Term, you can compare the effects of market volatilities on Western Assets and Old Westbury 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 Western Assets with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Old Westbury.
Diversification Opportunities for Western Assets and Old Westbury
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Old is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short and Western Assets 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 Western Assets Emerging are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Western Assets i.e., Western Assets and Old Westbury go up and down completely randomly.
Pair Corralation between Western Assets and Old Westbury
Assuming the 90 days horizon Western Assets is expected to generate 1.8 times less return on investment than Old Westbury. In addition to that, Western Assets is 3.43 times more volatile than Old Westbury Short Term. It trades about 0.01 of its total potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.08 per unit of volatility. If you would invest 1,014 in Old Westbury Short Term on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Old Westbury Short Term or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Old Westbury Short Term
Performance |
| Timeline |
| Western Assets Emerging |
| Old Westbury Short |
Western Assets and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Old Westbury
The main advantage of trading using opposite Western Assets and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Western Assets vs. Vanguard High Yield Tax Exempt | Western Assets vs. Victory High Yield | Western Assets vs. Artisan High Income | Western Assets vs. Blrc Sgy Mnp |
| Old Westbury vs. Permanent Portfolio Class | Old Westbury vs. HUMANA INC | Old Westbury vs. Aquagold International | Old Westbury vs. Barloworld Ltd ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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