Correlation Between Westcore Small-cap and Westcore Municipal

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

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

Diversification Opportunities for Westcore Small-cap and Westcore Municipal

-0.62

Correlation Coefficient

Westcore Small-cap  Westcore Municipal

Excellent diversification

The 3 months correlation between Westcore and Westcore is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Westcore Small Cap Growth and Westcore Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westcore Municipal and Westcore Small-cap 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 Small Cap Growth are associated (or correlated) with Westcore Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westcore Municipal has no effect on the direction of Westcore Small-cap i.e., Westcore Small-cap and Westcore Municipal go up and down completely randomly.

Pair Corralation between Westcore Small-cap and Westcore Municipal

Assuming the 90 days horizon Westcore Small Cap Growth is expected to under-perform the Westcore Municipal. In addition to that, Westcore Small-cap is 7.73 times more volatile than Westcore Municipal Opportunities. It trades about -0.12 of its total potential returns per unit of risk. Westcore Municipal Opportunities is currently generating about 0.04 per unit of volatility. If you would invest  955.00  in Westcore Municipal Opportunities on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Westcore Municipal Opportunities or generate 0.42% return on investment over 90 days.

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

Westcore Small Cap Growth  vs.  Westcore Municipal Opportuniti

Westcore Small Cap

Risk-Adjusted Performance

Very Weak

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

Westcore Municipal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Westcore Municipal Opportunities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Westcore Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Westcore Small-cap and Westcore Municipal

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

The idea behind Westcore Small Cap Growth and Westcore Municipal Opportunities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.