Correlation Between Washington Mutual and Proximus
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Proximus 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 Proximus 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 Proximus NV ADR, you can compare the effects of market volatilities on Washington Mutual and Proximus 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 Proximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Proximus.
Diversification Opportunities for Washington Mutual and Proximus
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Washington and Proximus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Proximus NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Proximus NV ADR 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 Proximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Proximus NV ADR has no effect on the direction of Washington Mutual i.e., Washington Mutual and Proximus go up and down completely randomly.
Pair Corralation between Washington Mutual and Proximus
Assuming the 90 days horizon Washington Mutual is expected to generate 1.42 times less return on investment than Proximus. But when comparing it to its historical volatility, Washington Mutual Investors is 7.09 times less risky than Proximus. It trades about 0.29 of its potential returns per unit of risk. Proximus NV ADR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Proximus NV ADR on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Proximus NV ADR or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Proximus NV ADR
Performance |
| Timeline |
| Washington Mutual |
| Proximus NV ADR |
Washington Mutual and Proximus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Proximus
The main advantage of trading using opposite Washington Mutual and Proximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Proximus 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 Proximus will offset losses from the drop in Proximus' 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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