Correlation Between Washington Mutual and Central Europe
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Central Europe 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 Central Europe 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 Central Europe Russia, you can compare the effects of market volatilities on Washington Mutual and Central Europe 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 Central Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Central Europe.
Diversification Opportunities for Washington Mutual and Central Europe
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Washington and Central is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Central Europe Russia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Europe Russia 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 Central Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Europe Russia has no effect on the direction of Washington Mutual i.e., Washington Mutual and Central Europe go up and down completely randomly.
Pair Corralation between Washington Mutual and Central Europe
Assuming the 90 days horizon Washington Mutual is expected to generate 3.49 times less return on investment than Central Europe. But when comparing it to its historical volatility, Washington Mutual Investors is 2.76 times less risky than Central Europe. It trades about 0.21 of its potential returns per unit of risk. Central Europe Russia is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,108 in Central Europe Russia on October 24, 2024 and sell it today you would earn a total of 109.00 from holding Central Europe Russia or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Central Europe Russia
Performance |
| Timeline |
| Washington Mutual |
| Central Europe Russia |
Washington Mutual and Central Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Central Europe
The main advantage of trading using opposite Washington Mutual and Central Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Central Europe 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 Central Europe will offset losses from the drop in Central Europe's long position.| Washington Mutual vs. Alphacentric Symmetry Strategy | Washington Mutual vs. Barings Emerging Markets | Washington Mutual vs. Western Assets Emerging | Washington Mutual vs. Catalystmillburn Hedge Strategy |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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