Correlation Between Old Westbury and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Ab Impact 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 Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and Ab Impact Municipal, you can compare the effects of market volatilities on Old Westbury and Ab Impact 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 Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Ab Impact.
Diversification Opportunities for Old Westbury and Ab Impact
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Old and ABIMX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Municipal are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Old Westbury i.e., Old Westbury and Ab Impact go up and down completely randomly.
Pair Corralation between Old Westbury and Ab Impact
Assuming the 90 days horizon Old Westbury Municipal is expected to generate 0.55 times more return on investment than Ab Impact. However, Old Westbury Municipal is 1.83 times less risky than Ab Impact. It trades about 0.04 of its potential returns per unit of risk. Ab Impact Municipal is currently generating about -0.06 per unit of risk. 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 | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Old Westbury Municipal vs. Ab Impact Municipal
Performance |
Timeline |
Old Westbury Municipal |
Ab Impact Municipal |
Old Westbury and Ab Impact Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Old Westbury and Ab Impact
The main advantage of trading using opposite Old Westbury and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.Old Westbury vs. Principal Lifetime Hybrid | Old Westbury vs. Balanced Allocation Fund | Old Westbury vs. Calvert Moderate Allocation | Old Westbury vs. Guidemark Large Cap |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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