Correlation Between Brown Advisory and Westcore Small-cap

Can any of the company-specific risk be diversified away by investing in both Brown Advisory and Westcore Small-cap 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 Brown Advisory and Westcore Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brown Advisory Sustainable and Westcore Small Cap Growth, you can compare the effects of market volatilities on Brown Advisory and Westcore Small-cap 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 Brown Advisory with a short position of Westcore Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Advisory and Westcore Small-cap.

Diversification Opportunities for Brown Advisory and Westcore Small-cap

0.99

Correlation Coefficient

Brown Advisory  Westcore Small-cap

No risk reduction

The 3 months correlation between Brown and Westcore is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Brown Advisory Sustainable and Westcore Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Small Cap and Brown Advisory 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 Brown Advisory Sustainable are associated (or correlated) with Westcore Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Small Cap has no effect on the direction of Brown Advisory i.e., Brown Advisory and Westcore Small-cap go up and down completely randomly.

Pair Corralation between Brown Advisory and Westcore Small-cap

Assuming the 90 days horizon Brown Advisory Sustainable is expected to under-perform the Westcore Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Brown Advisory Sustainable is 1.02 times less risky than Westcore Small-cap. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Westcore Small Cap Growth is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  2,113  in Westcore Small Cap Growth on December 29, 2024 and sell it today you would lose (223.00) from holding Westcore Small Cap Growth or give up 10.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Brown Advisory Sustainable  vs.  Westcore Small Cap Growth

Brown Advisory Susta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brown Advisory Sustainable has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Westcore Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westcore Small Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Brown Advisory and Westcore Small-cap

The main advantage of trading using opposite Brown Advisory and Westcore Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Advisory position performs unexpectedly, Westcore Small-cap 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 Westcore Small-cap will offset losses from the drop in Westcore Small-cap's long position.

The idea behind Brown Advisory Sustainable and Westcore Small Cap Growth 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.