Correlation Between Old Westbury and Federated High
Can any of the company-specific risk be diversified away by investing in both Old Westbury and Federated High 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 Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Municipal and Federated High Yield, you can compare the effects of market volatilities on Old Westbury and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Federated High.
Diversification Opportunities for Old Westbury and Federated High
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Federated is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield 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 Municipal are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Old Westbury i.e., Old Westbury and Federated High go up and down completely randomly.
Pair Corralation between Old Westbury and Federated High
Assuming the 90 days horizon Old Westbury is expected to generate 3.89 times less return on investment than Federated High. But when comparing it to its historical volatility, Old Westbury Municipal is 1.5 times less risky than Federated High. It trades about 0.05 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 547.00 in Federated High Yield on April 3, 2025 and sell it today you would earn a total of 101.00 from holding Federated High Yield or generate 18.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Old Westbury Municipal vs. Federated High Yield
Performance |
| Timeline |
| Old Westbury Municipal |
| Federated High Yield |
Old Westbury and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Federated High
The main advantage of trading using opposite Old Westbury and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Old Westbury vs. Old Westbury All | Old Westbury vs. Old Westbury Credit | Old Westbury vs. Old Westbury Fixed | Old Westbury vs. Old Westbury Large |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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