Correlation Between Osterweis Strategic and Metropolitan West

Can any of the company-specific risk be diversified away by investing in both Osterweis Strategic and Metropolitan West 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 Osterweis Strategic and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Osterweis Strategic Income and Metropolitan West Unconstrained, you can compare the effects of market volatilities on Osterweis Strategic and Metropolitan West 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 Osterweis Strategic with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osterweis Strategic and Metropolitan West.

Diversification Opportunities for Osterweis Strategic and Metropolitan West

-0.27

Correlation Coefficient

Osterweis Strategic  Metropolitan West

Very good diversification

The 3 months correlation between Osterweis and Metropolitan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Osterweis Strategic Income and Metropolitan West Unconstraine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West and Osterweis Strategic 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 Osterweis Strategic Income are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Osterweis Strategic i.e., Osterweis Strategic and Metropolitan West go up and down completely randomly.

Pair Corralation between Osterweis Strategic and Metropolitan West

Assuming the 90 days horizon Osterweis Strategic Income is expected to generate 0.47 times more return on investment than Metropolitan West. However, Osterweis Strategic Income is 2.15 times less risky than Metropolitan West. It trades about 0.27 of its potential returns per unit of risk. Metropolitan West Unconstrained is currently generating about 0.04 per unit of risk. If you would invest  1,105  in Osterweis Strategic Income on September 2, 2024 and sell it today you would earn a total of  17.00  from holding Osterweis Strategic Income or generate 1.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Osterweis Strategic Income  vs.  Metropolitan West Unconstraine

Osterweis Strategic

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Osterweis Strategic Income are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Osterweis Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Metropolitan West

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan West Unconstrained are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Metropolitan West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Osterweis Strategic and Metropolitan West

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

The idea behind Osterweis Strategic Income and Metropolitan West Unconstrained 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.