Correlation Between Berwyn Income and Westcore Plus

Can any of the company-specific risk be diversified away by investing in both Berwyn Income and Westcore Plus 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 Berwyn Income and Westcore Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berwyn Income Fund and Westcore Plus Bond, you can compare the effects of market volatilities on Berwyn Income and Westcore Plus 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 Berwyn Income with a short position of Westcore Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berwyn Income and Westcore Plus.

Diversification Opportunities for Berwyn Income and Westcore Plus

0.22

Correlation Coefficient

Berwyn Income  Westcore Plus

Modest diversification

The 3 months correlation between Berwyn and Westcore is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Berwyn Income Fund and Westcore Plus Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Plus Bond and Berwyn Income 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 Berwyn Income Fund are associated (or correlated) with Westcore Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Plus Bond has no effect on the direction of Berwyn Income i.e., Berwyn Income and Westcore Plus go up and down completely randomly.

Pair Corralation between Berwyn Income and Westcore Plus

Assuming the 90 days horizon Berwyn Income Fund is expected to generate 0.88 times more return on investment than Westcore Plus. However, Berwyn Income Fund is 1.13 times less risky than Westcore Plus. It trades about 0.12 of its potential returns per unit of risk. Westcore Plus Bond is currently generating about -0.03 per unit of risk. If you would invest  1,316  in Berwyn Income Fund on September 2, 2024 and sell it today you would earn a total of  27.00  from holding Berwyn Income Fund or generate 2.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Berwyn Income Fund  vs.  Westcore Plus Bond

Berwyn Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berwyn Income Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Berwyn Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Westcore Plus Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westcore Plus Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Westcore Plus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berwyn Income and Westcore Plus

The main advantage of trading using opposite Berwyn Income and Westcore Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berwyn Income position performs unexpectedly, Westcore Plus 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 Westcore Plus will offset losses from the drop in Westcore Plus' long position.

The idea behind Berwyn Income Fund and Westcore Plus Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.