Correlation Between Real Return and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Real Return 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 Real Return and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Real Return Fund and Old Westbury Small, you can compare the effects of market volatilities on Real Return 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 Real Return with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Return and Old Westbury.
Diversification Opportunities for Real Return and Old Westbury
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between REAL and Old is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Real Return Fund and Old Westbury Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Small and Real Return 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 Real Return 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 Small has no effect on the direction of Real Return i.e., Real Return and Old Westbury go up and down completely randomly.
Pair Corralation between Real Return and Old Westbury
Assuming the 90 days horizon Real Return is expected to generate 1.68 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Real Return Fund is 2.81 times less risky than Old Westbury. It trades about 0.19 of its potential returns per unit of risk. Old Westbury Small is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,772 in Old Westbury Small on July 8, 2025 and sell it today you would earn a total of 81.00 from holding Old Westbury Small or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Real Return Fund vs. Old Westbury Small
Performance |
| Timeline |
| Real Return Fund |
| Old Westbury Small |
Real Return and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Real Return and Old Westbury
The main advantage of trading using opposite Real Return and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Return 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.| Real Return vs. Global Technology Portfolio | Real Return vs. Putnam Global Technology | Real Return vs. Blackrock Science Technology | Real Return vs. Biotechnology Ultrasector Profund |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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