Correlation Between Teton Westwood and Pax Balanced

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

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

Diversification Opportunities for Teton Westwood and Pax Balanced

0.43

Correlation Coefficient

Teton Westwood  Pax Balanced

Very weak diversification

The 3 months correlation between Teton and Pax is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Small and Pax Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Balanced and Teton Westwood 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 Teton Westwood Small are associated (or correlated) with Pax Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Balanced has no effect on the direction of Teton Westwood i.e., Teton Westwood and Pax Balanced go up and down completely randomly.

Pair Corralation between Teton Westwood and Pax Balanced

Assuming the 90 days horizon Teton Westwood Small is expected to generate 1.25 times more return on investment than Pax Balanced. However, Teton Westwood is 1.25 times more volatile than Pax Balanced Fund. It trades about 0.07 of its potential returns per unit of risk. Pax Balanced Fund is currently generating about -0.08 per unit of risk. If you would invest  2,238  in Teton Westwood Small on October 22, 2024 and sell it today you would earn a total of  26.00  from holding Teton Westwood Small or generate 1.16% return on investment over 90 days.

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

Teton Westwood Small  vs.  Pax Balanced Fund

Teton Westwood Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teton Westwood Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pax Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Teton Westwood and Pax Balanced

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

The idea behind Teton Westwood Small and Pax Balanced Fund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.