Correlation Between Washington Mutual and ING Groep
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and ING Groep 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 ING Groep 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 ING Groep NV, you can compare the effects of market volatilities on Washington Mutual and ING Groep 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 ING Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and ING Groep.
Diversification Opportunities for Washington Mutual and ING Groep
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Washington and ING is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and ING Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ING Groep NV 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 ING Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ING Groep NV has no effect on the direction of Washington Mutual i.e., Washington Mutual and ING Groep go up and down completely randomly.
Pair Corralation between Washington Mutual and ING Groep
Assuming the 90 days horizon Washington Mutual is expected to generate 3.18 times less return on investment than ING Groep. But when comparing it to its historical volatility, Washington Mutual Investors is 1.21 times less risky than ING Groep. It trades about 0.21 of its potential returns per unit of risk. ING Groep NV is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 1,459 in ING Groep NV on October 24, 2024 and sell it today you would earn a total of 142.00 from holding ING Groep NV or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Washington Mutual Investors vs. ING Groep NV
Performance |
| Timeline |
| Washington Mutual |
| ING Groep NV |
Washington Mutual and ING Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and ING Groep
The main advantage of trading using opposite Washington Mutual and ING Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, ING Groep 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 ING Groep will offset losses from the drop in ING Groep'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 |
| ING Groep vs. Aegon NV | ING Groep vs. ABN Amro Group | ING Groep vs. Koninklijke Philips NV | ING Groep vs. Unilever PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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