Correlation Between Teton Westwood and Sextant Growth

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

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

Diversification Opportunities for Teton Westwood and Sextant Growth

0.36

Correlation Coefficient

Teton Westwood  Sextant Growth

Weak diversification

The 3 months correlation between Teton and Sextant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Equity and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth and Teton Westwood 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 Teton Westwood Equity are associated (or correlated) with Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Teton Westwood i.e., Teton Westwood and Sextant Growth go up and down completely randomly.

Pair Corralation between Teton Westwood and Sextant Growth

Assuming the 90 days horizon Teton Westwood Equity is expected to under-perform the Sextant Growth. In addition to that, Teton Westwood is 2.17 times more volatile than Sextant Growth Fund. It trades about -0.1 of its total potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.3 per unit of volatility. If you would invest  5,494  in Sextant Growth Fund on September 6, 2024 and sell it today you would earn a total of  312.00  from holding Sextant Growth Fund or generate 5.68% return on investment over 90 days.

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

Teton Westwood Equity  vs.  Sextant Growth Fund

Teton Westwood Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sextant Growth

Risk-Adjusted Performance

19 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sextant Growth Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sextant Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teton Westwood and Sextant Growth

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

The idea behind Teton Westwood Equity and Sextant Growth Fund 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.