Correlation Between Old Westbury and Inverse Mid

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

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

Diversification Opportunities for Old Westbury and Inverse Mid

-0.93

Correlation Coefficient

Old Westbury  Inverse Mid

Pay attention - limited upside

The 3 months correlation between Old and Inverse is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Inverse Mid Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Mid Cap and Old Westbury 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 Old Westbury Large are associated (or correlated) with Inverse Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Mid Cap has no effect on the direction of Old Westbury i.e., Old Westbury and Inverse Mid go up and down completely randomly.

Pair Corralation between Old Westbury and Inverse Mid

Assuming the 90 days horizon Old Westbury Large is expected to generate 0.65 times more return on investment than Inverse Mid. However, Old Westbury Large is 1.53 times less risky than Inverse Mid. It trades about 0.17 of its potential returns per unit of risk. Inverse Mid Cap Strategy is currently generating about -0.12 per unit of risk. If you would invest  2,039  in Old Westbury Large on September 14, 2024 and sell it today you would earn a total of  128.00  from holding Old Westbury Large or generate 6.28% return on investment over 90 days.

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

Old Westbury Large  vs.  Inverse Mid Cap Strategy

Old Westbury Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Old Westbury Large are ranked lower than 13 (%) 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.

Inverse Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Mid Cap Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Old Westbury and Inverse Mid

The main advantage of trading using opposite Old Westbury and Inverse Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Inverse Mid 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 Inverse Mid will offset losses from the drop in Inverse Mid's long position.

The idea behind Old Westbury Large and Inverse Mid Cap Strategy 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 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.