Correlation Between Fisher Large and Old Westbury

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

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

Diversification Opportunities for Fisher Large and Old Westbury

0.96

Correlation Coefficient

Fisher Large  Old Westbury

Almost no diversification

The 3 months correlation between Fisher and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fisher Large Cap and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Fisher 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 Fisher Large Cap 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 Large has no effect on the direction of Fisher Large i.e., Fisher Large and Old Westbury go up and down completely randomly.

Pair Corralation between Fisher Large and Old Westbury

Assuming the 90 days horizon Fisher Large is expected to generate 1.48 times less return on investment than Old Westbury. In addition to that, Fisher Large is 1.23 times more volatile than Old Westbury Large. It trades about 0.05 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.09 per unit of volatility. If you would invest  2,132  in Old Westbury Large on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Old Westbury Large or generate 0.89% return on investment over 90 days.

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

Fisher Large Cap  vs.  Old Westbury Large

Fisher Large Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fisher Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Old Westbury Large

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Large are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 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 Fisher Large and Old Westbury

The main advantage of trading using opposite Fisher Large and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisher Large 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 Fisher Large Cap and Old Westbury Large 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.