Correlation Between Old Westbury and Huber Capital

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

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

Diversification Opportunities for Old Westbury and Huber Capital

0.7

Correlation Coefficient

Old Westbury  Huber Capital

Poor diversification

The 3 months correlation between Old and Huber is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Small and Huber Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Equity 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 Small are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Equity has no effect on the direction of Old Westbury i.e., Old Westbury and Huber Capital go up and down completely randomly.

Pair Corralation between Old Westbury and Huber Capital

Assuming the 90 days horizon Old Westbury Small is expected to under-perform the Huber Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Old Westbury Small is 1.15 times less risky than Huber Capital. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Huber Capital Equity is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,346  in Huber Capital Equity on December 4, 2024 and sell it today you would lose (59.00) from holding Huber Capital Equity or give up 1.76% of portfolio value over 90 days.

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

Old Westbury Small  vs.  Huber Capital Equity

Old Westbury Small

Risk-Adjusted Performance

Very Weak

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

Huber Capital Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huber Capital Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Huber Capital 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 Huber Capital

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

The idea behind Old Westbury Small and Huber Capital Equity 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.