Correlation Between Old Westbury and Balanced Allocation
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Balanced Allocation 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 Old Westbury and Balanced Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Fixed and Balanced Allocation Fund, you can compare the effects of market volatilities on Old Westbury and Balanced Allocation 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 Old Westbury with a short position of Balanced Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Balanced Allocation.
Diversification Opportunities for Old Westbury and Balanced Allocation
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Balanced is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Fixed and Balanced Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Allocation and Old Westbury 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 Old Westbury Fixed are associated (or correlated) with Balanced Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Allocation has no effect on the direction of Old Westbury i.e., Old Westbury and Balanced Allocation go up and down completely randomly.
Pair Corralation between Old Westbury and Balanced Allocation
Assuming the 90 days horizon Old Westbury Fixed is expected to under-perform the Balanced Allocation. But the mutual fund apears to be less risky and, when comparing its historical volatility, Old Westbury Fixed is 1.26 times less risky than Balanced Allocation. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Balanced Allocation Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,225 in Balanced Allocation Fund on May 2, 2025 and sell it today you would earn a total of 4.00 from holding Balanced Allocation Fund or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Old Westbury Fixed vs. Balanced Allocation Fund
Performance |
| Timeline |
| Old Westbury Fixed |
| Balanced Allocation |
Old Westbury and Balanced Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Balanced Allocation
The main advantage of trading using opposite Old Westbury and Balanced Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Balanced Allocation 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 Balanced Allocation will offset losses from the drop in Balanced Allocation's long position.| Old Westbury vs. Maryland Short Term Tax Free | Old Westbury vs. Nuveen Short Term | Old Westbury vs. Barings Active Short | Old Westbury vs. American Funds Tax Exempt |
| Balanced Allocation vs. Growth Allocation Fund | Balanced Allocation vs. Defensive Market Strategies | Balanced Allocation vs. Defensive Market Strategies | Balanced Allocation vs. Value Equity Institutional |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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