Correlation Between Dana Large and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Dana Large and Westwood Largecap 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 Dana Large and Westwood Largecap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dana Large Cap and Westwood Largecap Value, you can compare the effects of market volatilities on Dana Large and Westwood Largecap 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 Dana Large with a short position of Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Westwood Largecap.
Diversification Opportunities for Dana Large and Westwood Largecap
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dana and Westwood is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value and Dana Large 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 Dana Large Cap are associated (or correlated) with Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Dana Large i.e., Dana Large and Westwood Largecap go up and down completely randomly.
Pair Corralation between Dana Large and Westwood Largecap
Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Westwood Largecap. In addition to that, Dana Large is 1.4 times more volatile than Westwood Largecap Value. It trades about -0.1 of its total potential returns per unit of risk. Westwood Largecap Value is currently generating about -0.01 per unit of volatility. If you would invest 1,347 in Westwood Largecap Value on December 29, 2024 and sell it today you would lose (9.00) from holding Westwood Largecap Value or give up 0.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dana Large Cap vs. Westwood Largecap Value
Performance |
Timeline |
Dana Large Cap |
Westwood Largecap Value |
Dana Large and Westwood Largecap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dana Large and Westwood Largecap
The main advantage of trading using opposite Dana Large and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large position performs unexpectedly, Westwood Largecap 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 Largecap will offset losses from the drop in Westwood Largecap's long position.Dana Large vs. Goldman Sachs Short | Dana Large vs. Federated Municipal Ultrashort | Dana Large vs. Siit High Yield | Dana Large vs. Morningstar Defensive Bond |
Westwood Largecap vs. Timothy Plan Conservative | Westwood Largecap vs. Madison Diversified Income | Westwood Largecap vs. Eaton Vance Diversified | Westwood Largecap vs. Fidelity Advisor Diversified |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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