Correlation Between Western Asset and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Asset 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 Asset Diversified and Old Westbury Large, you can compare the effects of market volatilities on Western Asset 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 Asset with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Old Westbury.
Diversification Opportunities for Western Asset and Old Westbury
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Old is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Western Asset 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 Asset Diversified 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 Large has no effect on the direction of Western Asset i.e., Western Asset and Old Westbury go up and down completely randomly.
Pair Corralation between Western Asset and Old Westbury
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Old Westbury. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 2.57 times less risky than Old Westbury. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Old Westbury Large is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,091 in Old Westbury Large on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Old Westbury Large or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Old Westbury Large
Performance |
| Timeline |
| Western Asset Diversified |
| Old Westbury Large |
Western Asset and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Old Westbury
The main advantage of trading using opposite Western Asset and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Old Westbury vs. Praxis Growth Index | Old Westbury vs. Small Pany Growth | Old Westbury vs. Pioneer Fundamental Growth | Old Westbury vs. Qs Moderate Growth |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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