Correlation Between Value Line and Teton Westwood

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

By analyzing existing cross correlation between Value Line Income and Teton Westwood Balanced, you can compare the effects of market volatilities on Value Line and Teton Westwood 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 Value Line with a short position of Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Teton Westwood.

Diversification Opportunities for Value Line and Teton Westwood

-0.25

Correlation Coefficient

Value Line  Teton Westwood

Very good diversification

The 3 months correlation between Value and Teton is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Income and Teton Westwood Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Balanced and Value Line 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 Value Line Income are associated (or correlated) with Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Balanced has no effect on the direction of Value Line i.e., Value Line and Teton Westwood go up and down completely randomly.

Pair Corralation between Value Line and Teton Westwood

Assuming the 90 days horizon Value Line Income is expected to generate 0.91 times more return on investment than Teton Westwood. However, Value Line Income is 1.1 times less risky than Teton Westwood. It trades about 0.26 of its potential returns per unit of risk. Teton Westwood Balanced is currently generating about -0.07 per unit of risk. If you would invest  1,173  in Value Line Income on September 13, 2024 and sell it today you would earn a total of  163.00  from holding Value Line Income or generate 13.9% return on investment over 90 days.

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

Value Line Income  vs.  Teton Westwood Balanced

Value Line Income

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Income are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Value Line showed solid returns over the last few months and may actually be approaching a breakup point.

Teton Westwood Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Value Line and Teton Westwood

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

The idea behind Value Line Income and Teton Westwood Balanced 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.