Correlation Between Commonwealth Global and Westwood Low

Can any of the company-specific risk be diversified away by investing in both Commonwealth Global and Westwood Low 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 Commonwealth Global and Westwood Low into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commonwealth Global Fund and Westwood Low Volatility, you can compare the effects of market volatilities on Commonwealth Global and Westwood Low 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 Commonwealth Global with a short position of Westwood Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Global and Westwood Low.

Diversification Opportunities for Commonwealth Global and Westwood Low

0.0

Correlation Coefficient

Commonwealth Global  Westwood Low

Pay attention - limited upside

The 3 months correlation between Commonwealth and Westwood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Global Fund and Westwood Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Low Volatility and Commonwealth Global 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 Commonwealth Global Fund are associated (or correlated) with Westwood Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Low Volatility has no effect on the direction of Commonwealth Global i.e., Commonwealth Global and Westwood Low go up and down completely randomly.

Pair Corralation between Commonwealth Global and Westwood Low

Assuming the 90 days horizon Commonwealth Global Fund is expected to under-perform the Westwood Low. In addition to that, Commonwealth Global is 10.89 times more volatile than Westwood Low Volatility. It trades about -0.01 of its total potential returns per unit of risk. Westwood Low Volatility is currently generating about 0.24 per unit of volatility. If you would invest  600.00  in Westwood Low Volatility on September 22, 2024 and sell it today you would earn a total of  2.00  from holding Westwood Low Volatility or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	14.17%
Values	Daily Returns

Commonwealth Global Fund  vs.  Westwood Low Volatility

Commonwealth Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Westwood Low Volatility

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Commonwealth Global and Westwood Low

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

The idea behind Commonwealth Global Fund and Westwood Low Volatility 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.