Correlation Between Westwood Largecap and Doubleline Emerging

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

By analyzing existing cross correlation between Westwood Largecap Value and Doubleline Emerging Markets, you can compare the effects of market volatilities on Westwood Largecap and Doubleline Emerging 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 Westwood Largecap with a short position of Doubleline Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Doubleline Emerging.

Diversification Opportunities for Westwood Largecap and Doubleline Emerging

-0.62

Correlation Coefficient

Westwood Largecap  Doubleline Emerging

Excellent diversification

The 3 months correlation between Westwood and Doubleline is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Doubleline Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Emerging and Westwood Largecap 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 Westwood Largecap Value are associated (or correlated) with Doubleline Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Emerging has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Doubleline Emerging go up and down completely randomly.

Pair Corralation between Westwood Largecap and Doubleline Emerging

Assuming the 90 days horizon Westwood Largecap Value is expected to generate 1.72 times more return on investment than Doubleline Emerging. However, Westwood Largecap is 1.72 times more volatile than Doubleline Emerging Markets. It trades about 0.13 of its potential returns per unit of risk. Doubleline Emerging Markets is currently generating about -0.06 per unit of risk. If you would invest  1,463  in Westwood Largecap Value on September 3, 2024 and sell it today you would earn a total of  87.00  from holding Westwood Largecap Value or generate 5.95% return on investment over 90 days.

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

Westwood Largecap Value  vs.  Doubleline Emerging Markets

Westwood Largecap Value

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Largecap Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Westwood Largecap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Doubleline Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Westwood Largecap and Doubleline Emerging

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

The idea behind Westwood Largecap Value and Doubleline Emerging Markets 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.