Correlation Between Washington Mutual and Kyung Chang
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Kyung Chang 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 Washington Mutual and Kyung Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and Kyung Chang Industrial, you can compare the effects of market volatilities on Washington Mutual and Kyung Chang 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 Washington Mutual with a short position of Kyung Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Kyung Chang.
Diversification Opportunities for Washington Mutual and Kyung Chang
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and Kyung is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Kyung Chang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung Chang Industrial and Washington Mutual 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 Washington Mutual Investors are associated (or correlated) with Kyung Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung Chang Industrial has no effect on the direction of Washington Mutual i.e., Washington Mutual and Kyung Chang go up and down completely randomly.
Pair Corralation between Washington Mutual and Kyung Chang
Assuming the 90 days horizon Washington Mutual Investors is expected to under-perform the Kyung Chang. But the mutual fund apears to be less risky and, when comparing its historical volatility, Washington Mutual Investors is 2.21 times less risky than Kyung Chang. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Kyung Chang Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 193,192 in Kyung Chang Industrial on November 3, 2024 and sell it today you would earn a total of 5,908 from holding Kyung Chang Industrial or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.24% |
| Values | Daily Returns |
Washington Mutual Investors vs. Kyung Chang Industrial
Performance |
| Timeline |
| Washington Mutual |
| Kyung Chang Industrial |
Washington Mutual and Kyung Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Kyung Chang
The main advantage of trading using opposite Washington Mutual and Kyung Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Kyung Chang 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 Kyung Chang will offset losses from the drop in Kyung Chang's long position.| Washington Mutual vs. Neuberger Berman Real | Washington Mutual vs. Dunham Real Estate | Washington Mutual vs. Real Estate Ultrasector | Washington Mutual vs. Texton Property |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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