Correlation Between Washington Mutual and Auckland International
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Auckland International 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 Auckland International 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 Auckland International Airport, you can compare the effects of market volatilities on Washington Mutual and Auckland International 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 Auckland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Auckland International.
Diversification Opportunities for Washington Mutual and Auckland International
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Washington and Auckland is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Auckland International Airport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auckland International 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 Auckland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auckland International has no effect on the direction of Washington Mutual i.e., Washington Mutual and Auckland International go up and down completely randomly.
Pair Corralation between Washington Mutual and Auckland International
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.6 times more return on investment than Auckland International. However, Washington Mutual Investors is 1.66 times less risky than Auckland International. It trades about 0.05 of its potential returns per unit of risk. Auckland International Airport is currently generating about 0.01 per unit of risk. If you would invest 5,817 in Washington Mutual Investors on November 3, 2024 and sell it today you would earn a total of 584.00 from holding Washington Mutual Investors or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Washington Mutual Investors vs. Auckland International Airport
Performance |
| Timeline |
| Washington Mutual |
| Auckland International |
Washington Mutual and Auckland International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Auckland International
The main advantage of trading using opposite Washington Mutual and Auckland International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Auckland International 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 Auckland International will offset losses from the drop in Auckland International's long position.| Washington Mutual vs. Amg Managers Centersquare | Washington Mutual vs. Tiaa Cref Real Estate | Washington Mutual vs. Deutsche Real Estate | Washington Mutual vs. Tiaa Cref Real Estate |
| Auckland International vs. Coeur Mining | Auckland International vs. BOSTON BEER A | Auckland International vs. Calibre Mining Corp | Auckland International vs. Molson Coors Beverage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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