Correlation Between Washington Mutual and Investar Holding
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Investar Holding 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 Investar Holding 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 Investar Holding Corp, you can compare the effects of market volatilities on Washington Mutual and Investar Holding 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 Investar Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Investar Holding.
Diversification Opportunities for Washington Mutual and Investar Holding
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Investar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Investar Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investar Holding Corp 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 Investar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investar Holding Corp has no effect on the direction of Washington Mutual i.e., Washington Mutual and Investar Holding go up and down completely randomly.
Pair Corralation between Washington Mutual and Investar Holding
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.35 times more return on investment than Investar Holding. However, Washington Mutual Investors is 2.87 times less risky than Investar Holding. It trades about 0.3 of its potential returns per unit of risk. Investar Holding Corp is currently generating about -0.25 per unit of risk. If you would invest 6,150 in Washington Mutual Investors on November 3, 2024 and sell it today you would earn a total of 251.00 from holding Washington Mutual Investors or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Washington Mutual Investors vs. Investar Holding Corp
Performance |
| Timeline |
| Washington Mutual |
| Investar Holding Corp |
Washington Mutual and Investar Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Investar Holding
The main advantage of trading using opposite Washington Mutual and Investar Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Investar Holding 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 Investar Holding will offset losses from the drop in Investar Holding'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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