Correlation Between Washington Mutual and Income Fund
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Income Fund 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 Income Fund 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 Income Fund Of, you can compare the effects of market volatilities on Washington Mutual and Income Fund 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 Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Income Fund.
Diversification Opportunities for Washington Mutual and Income Fund
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and Income is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Washington Mutual i.e., Washington Mutual and Income Fund go up and down completely randomly.
Pair Corralation between Washington Mutual and Income Fund
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 1.41 times more return on investment than Income Fund. However, Washington Mutual is 1.41 times more volatile than Income Fund Of. It trades about 0.11 of its potential returns per unit of risk. Income Fund Of is currently generating about 0.08 per unit of risk. If you would invest 4,723 in Washington Mutual Investors on September 3, 2024 and sell it today you would earn a total of 1,880 from holding Washington Mutual Investors or generate 39.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Income Fund Of
Performance |
| Timeline |
| Washington Mutual |
| Income Fund |
Washington Mutual and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Income Fund
The main advantage of trading using opposite Washington Mutual and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.| Washington Mutual vs. Rationalpier 88 Convertible | Washington Mutual vs. Fidelity Sai Convertible | Washington Mutual vs. Rationalpier 88 Convertible | Washington Mutual vs. Lord Abbett Convertible |
| Income Fund vs. Capital Income Builder | Income Fund vs. Capital World Growth | Income Fund vs. American Balanced | Income Fund vs. American Funds Fundamental |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |