Correlation Between Emerging Markets and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Emerging Markets 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 Emerging Markets and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Old Westbury Municipal, you can compare the effects of market volatilities on Emerging Markets 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 Emerging Markets with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Old Westbury.
Diversification Opportunities for Emerging Markets and Old Westbury
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerging and Old is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund 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 Emerging Markets 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 Emerging Markets Fund 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 Emerging Markets i.e., Emerging Markets and Old Westbury go up and down completely randomly.
Pair Corralation between Emerging Markets and Old Westbury
Assuming the 90 days horizon Emerging Markets Fund is expected to under-perform the Old Westbury. In addition to that, Emerging Markets is 5.15 times more volatile than Old Westbury Municipal. It trades about -0.02 of its total potential returns per unit of risk. Old Westbury Municipal is currently generating about 0.04 per unit of volatility. If you would invest 1,152 in Old Westbury Municipal on December 1, 2024 and sell it today you would earn a total of 5.00 from holding Old Westbury Municipal or generate 0.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Emerging Markets Fund vs. Old Westbury Municipal
Performance |
Timeline |
Emerging Markets |
Old Westbury Municipal |
Emerging Markets and Old Westbury Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerging Markets and Old Westbury
The main advantage of trading using opposite Emerging Markets and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets 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.Emerging Markets vs. Aig Government Money | Emerging Markets vs. Dunham Porategovernment Bond | Emerging Markets vs. Fidelity Series Government | Emerging Markets vs. Transamerica Funds |
Old Westbury vs. Principal Lifetime Hybrid | Old Westbury vs. Balanced Allocation Fund | Old Westbury vs. Calvert Moderate Allocation | Old Westbury vs. Guidemark Large Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |