Correlation Between Black Oak and Old Westbury

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

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

Diversification Opportunities for Black Oak and Old Westbury

-0.14

Correlation Coefficient

Black Oak  Old Westbury

Good diversification

The 3 months correlation between Black and Old is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Black Oak Emerging and Old Westbury Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Municipal and Black Oak 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 Black Oak Emerging 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 Municipal has no effect on the direction of Black Oak i.e., Black Oak and Old Westbury go up and down completely randomly.

Pair Corralation between Black Oak and Old Westbury

If you would invest  681.00  in Black Oak Emerging on December 27, 2024 and sell it today you would earn a total of  24.00  from holding Black Oak Emerging or generate 3.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Black Oak Emerging  vs.  Old Westbury Municipal

Black Oak Emerging

Risk-Adjusted Performance

Very Weak

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

Old Westbury Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Old Westbury Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, 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 Black Oak and Old Westbury

The main advantage of trading using opposite Black Oak and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Oak 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 Black Oak Emerging and Old Westbury Municipal 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.