Correlation Between Old Westbury and Dnyax

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

By analyzing existing cross correlation between Old Westbury New and Dnyax, you can compare the effects of market volatilities on Old Westbury and Dnyax 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 Dnyax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Dnyax.

Diversification Opportunities for Old Westbury and Dnyax

0.89

Correlation Coefficient

Old Westbury  Dnyax

Very poor diversification

The 3 months correlation between Old and Dnyax is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury New and Dnyax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dnyax 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 New are associated (or correlated) with Dnyax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dnyax has no effect on the direction of Old Westbury i.e., Old Westbury and Dnyax go up and down completely randomly.

Pair Corralation between Old Westbury and Dnyax

Assuming the 90 days horizon Old Westbury is expected to generate 7.65 times less return on investment than Dnyax. But when comparing it to its historical volatility, Old Westbury New is 1.49 times less risky than Dnyax. It trades about 0.01 of its potential returns per unit of risk. Dnyax is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,367  in Dnyax on August 31, 2024 and sell it today you would earn a total of  11.00  from holding Dnyax or generate 0.8% return on investment over 90 days.

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

Old Westbury New  vs.  Dnyax

Old Westbury New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Westbury New has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Old Westbury is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dnyax

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dnyax are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dnyax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Old Westbury and Dnyax

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

The idea behind Old Westbury New and Dnyax 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.