Correlation Between Westcore Plus and Westcore Small

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

By analyzing existing cross correlation between Westcore Plus Bond and Westcore Small Cap Growth, you can compare the effects of market volatilities on Westcore Plus and Westcore Small 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 Westcore Plus with a short position of Westcore Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westcore Plus and Westcore Small.

Diversification Opportunities for Westcore Plus and Westcore Small

-0.68

Correlation Coefficient

Westcore Plus  Westcore Small

Excellent diversification

The 3 months correlation between Westcore and Westcore is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westcore Plus Bond and Westcore Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Small Cap and Westcore Plus 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 Westcore Plus Bond are associated (or correlated) with Westcore Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Small Cap has no effect on the direction of Westcore Plus i.e., Westcore Plus and Westcore Small go up and down completely randomly.

Pair Corralation between Westcore Plus and Westcore Small

Assuming the 90 days horizon Westcore Plus Bond is expected to under-perform the Westcore Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Westcore Plus Bond is 3.89 times less risky than Westcore Small. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Westcore Small Cap Growth is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,030  in Westcore Small Cap Growth on September 2, 2024 and sell it today you would earn a total of  347.00  from holding Westcore Small Cap Growth or generate 17.09% return on investment over 90 days.

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

Westcore Plus Bond  vs.  Westcore Small Cap Growth

Westcore Plus Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Westcore Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Westcore Small Cap Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Westcore Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westcore Plus and Westcore Small

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

The idea behind Westcore Plus Bond and Westcore Small Cap Growth 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.