Correlation Between International Investors and Old Westbury

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

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

Diversification Opportunities for International Investors and Old Westbury

0.86

Correlation Coefficient

International Investors  Old Westbury

Very poor diversification

The 3 months correlation between International and Old is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Investors Gold and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short and International Investors 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 International Investors Gold 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 Short has no effect on the direction of International Investors i.e., International Investors and Old Westbury go up and down completely randomly.

Pair Corralation between International Investors and Old Westbury

Assuming the 90 days horizon International Investors Gold is expected to generate 17.31 times more return on investment than Old Westbury. However, International Investors is 17.31 times more volatile than Old Westbury Short Term. It trades about 0.31 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.26 per unit of risk. If you would invest  1,072  in International Investors Gold on December 30, 2024 and sell it today you would earn a total of  374.00  from holding International Investors Gold or generate 34.89% return on investment over 90 days.

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

International Investors Gold  vs.  Old Westbury Short Term

International Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Investors Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, International Investors showed solid returns over the last few months and may actually be approaching a breakup point.

Old Westbury Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Short Term are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. 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 International Investors and Old Westbury

The main advantage of trading using opposite International Investors and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Investors 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 International Investors Gold and Old Westbury Short Term 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.