Correlation Between Washington Mutual and Ace Hardware
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Ace Hardware 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 Ace Hardware 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 Ace Hardware Indonesia, you can compare the effects of market volatilities on Washington Mutual and Ace Hardware 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 Ace Hardware. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Ace Hardware.
Diversification Opportunities for Washington Mutual and Ace Hardware
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Washington and Ace is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Ace Hardware Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ace Hardware Indonesia 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 Ace Hardware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ace Hardware Indonesia has no effect on the direction of Washington Mutual i.e., Washington Mutual and Ace Hardware go up and down completely randomly.
Pair Corralation between Washington Mutual and Ace Hardware
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.34 times more return on investment than Ace Hardware. However, Washington Mutual Investors is 2.93 times less risky than Ace Hardware. It trades about 0.13 of its potential returns per unit of risk. Ace Hardware Indonesia is currently generating about -0.19 per unit of risk. If you would invest 6,205 in Washington Mutual Investors on October 22, 2024 and sell it today you would earn a total of 96.00 from holding Washington Mutual Investors or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Washington Mutual Investors vs. Ace Hardware Indonesia
Performance |
| Timeline |
| Washington Mutual |
| Ace Hardware Indonesia |
Washington Mutual and Ace Hardware Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Ace Hardware
The main advantage of trading using opposite Washington Mutual and Ace Hardware positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Ace Hardware 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 Ace Hardware will offset losses from the drop in Ace Hardware's long position.| Washington Mutual vs. Qs Large Cap | Washington Mutual vs. Fpddjx | Washington Mutual vs. Wmcanx | Washington Mutual vs. Fa 529 Aggressive |
| Ace Hardware vs. Japfa Comfeed Indonesia | Ace Hardware vs. Charoen Pokphand Indonesia | Ace Hardware vs. Erajaya Swasembada Tbk | Ace Hardware vs. Indofood Cbp Sukses |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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