Correlation Between Avantis Us and Old Westbury

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

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

Diversification Opportunities for Avantis Us and Old Westbury

0.41

Correlation Coefficient

Avantis Us  Old Westbury

Very weak diversification

The 3 months correlation between Avantis and Old is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Old Westbury Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Credit and Avantis Us 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 Avantis Large Cap are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Credit has no effect on the direction of Avantis Us i.e., Avantis Us and Old Westbury go up and down completely randomly.

Pair Corralation between Avantis Us and Old Westbury

Assuming the 90 days horizon Avantis Large Cap is expected to generate 2.1 times more return on investment than Old Westbury. However, Avantis Us is 2.1 times more volatile than Old Westbury Credit. It trades about 0.07 of its potential returns per unit of risk. Old Westbury Credit is currently generating about 0.02 per unit of risk. If you would invest  1,082  in Avantis Large Cap on October 10, 2024 and sell it today you would earn a total of  347.00  from holding Avantis Large Cap or generate 32.07% return on investment over 90 days.

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

Avantis Large Cap  vs.  Old Westbury Credit

Avantis Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Old Westbury Credit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Avantis Us and Old Westbury

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

The idea behind Avantis Large Cap and Old Westbury Credit 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.