Correlation Between Old Westbury and Calvert Large

Can any of the company-specific risk be diversified away by investing in both Old Westbury and Calvert Large 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 Old Westbury and Calvert Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Old Westbury Small and Calvert Large Cap, you can compare the effects of market volatilities on Old Westbury and Calvert Large 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 Old Westbury with a short position of Calvert Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Calvert Large.

Diversification Opportunities for Old Westbury and Calvert Large

0.85

Correlation Coefficient

Old Westbury  Calvert Large

Very poor diversification

The 3 months correlation between Old and Calvert is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Small and Calvert Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Large Cap and Old Westbury 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 Old Westbury Small are associated (or correlated) with Calvert Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Large Cap has no effect on the direction of Old Westbury i.e., Old Westbury and Calvert Large go up and down completely randomly.

Pair Corralation between Old Westbury and Calvert Large

Assuming the 90 days horizon Old Westbury Small is expected to generate 0.38 times more return on investment than Calvert Large. However, Old Westbury Small is 2.63 times less risky than Calvert Large. It trades about 0.1 of its potential returns per unit of risk. Calvert Large Cap is currently generating about -0.21 per unit of risk. If you would invest  1,719  in Old Westbury Small on September 14, 2024 and sell it today you would earn a total of  20.00  from holding Old Westbury Small or generate 1.16% return on investment over 90 days.

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

Old Westbury Small  vs.  Calvert Large Cap

Old Westbury Small

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Old Westbury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Old Westbury and Calvert Large

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

The idea behind Old Westbury Small and Calvert Large Cap 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.