Correlation Between Balanced Allocation and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Balanced Allocation and Old Westbury 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 Balanced Allocation and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Allocation Fund and Old Westbury Large, you can compare the effects of market volatilities on Balanced Allocation and Old Westbury 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 Balanced Allocation with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Allocation and Old Westbury.
Diversification Opportunities for Balanced Allocation and Old Westbury
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Old is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Allocation Fund and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Balanced Allocation 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 Balanced Allocation Fund are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Balanced Allocation i.e., Balanced Allocation and Old Westbury go up and down completely randomly.
Pair Corralation between Balanced Allocation and Old Westbury
Assuming the 90 days horizon Balanced Allocation is expected to generate 1.87 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Balanced Allocation Fund is 1.6 times less risky than Old Westbury. It trades about 0.32 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,887 in Old Westbury Large on April 23, 2025 and sell it today you would earn a total of 271.00 from holding Old Westbury Large or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Allocation Fund vs. Old Westbury Large
Performance |
| Timeline |
| Balanced Allocation |
| Old Westbury Large |
Balanced Allocation and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Allocation and Old Westbury
The main advantage of trading using opposite Balanced Allocation and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Allocation position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Balanced Allocation vs. Delaware Healthcare Fund | Balanced Allocation vs. Alphacentric Lifesci Healthcare | Balanced Allocation vs. T Rowe Price | Balanced Allocation vs. Fidelity Advisor Health |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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