Correlation Between Investec Emerging and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Old Westbury Short Term, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Old Westbury.
Diversification Opportunities for Investec Emerging and Old Westbury
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investec and Old is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets 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 Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Old Westbury go up and down completely randomly.
Pair Corralation between Investec Emerging and Old Westbury
Assuming the 90 days horizon Investec Emerging is expected to generate 1.11 times less return on investment than Old Westbury. In addition to that, Investec Emerging is 13.49 times more volatile than Old Westbury Short Term. It trades about 0.03 of its total potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.39 per unit of volatility. If you would invest 1,014 in Old Westbury Short Term on December 13, 2024 and sell it today you would earn a total of 8.00 from holding Old Westbury Short Term or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Old Westbury Short Term
Performance |
| Timeline |
| Investec Emerging Markets |
| Old Westbury Short |
Investec Emerging and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Old Westbury
The main advantage of trading using opposite Investec Emerging and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.| Investec Emerging vs. Calvert Moderate Allocation | ||
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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