Correlation Between BBX Capital and Westwood Holdings

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

By analyzing existing cross correlation between BBX Capital and Westwood Holdings Group, you can compare the effects of market volatilities on BBX Capital and Westwood Holdings 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 BBX Capital with a short position of Westwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBX Capital and Westwood Holdings.

Diversification Opportunities for BBX Capital and Westwood Holdings

0.17

Correlation Coefficient

BBX Capital  Westwood Holdings

Average diversification

The 3 months correlation between BBX and Westwood is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BBX Capital and Westwood Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Holdings and BBX Capital 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 BBX Capital are associated (or correlated) with Westwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Holdings has no effect on the direction of BBX Capital i.e., BBX Capital and Westwood Holdings go up and down completely randomly.

Pair Corralation between BBX Capital and Westwood Holdings

Assuming the 90 days horizon BBX Capital is expected to under-perform the Westwood Holdings. But the otc stock apears to be less risky and, when comparing its historical volatility, BBX Capital is 2.29 times less risky than Westwood Holdings. The otc stock trades about -0.17 of its potential returns per unit of risk. The Westwood Holdings Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Westwood Holdings Group on November 19, 2024 and sell it today you would earn a total of  78.00  from holding Westwood Holdings Group or generate 4.85% return on investment over 90 days.

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

BBX Capital  vs.  Westwood Holdings Group

BBX Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBX Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Westwood Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Holdings Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Westwood Holdings may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with BBX Capital and Westwood Holdings

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

The idea behind BBX Capital and Westwood Holdings Group 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.