Correlation Between Washington Mutual and Herman Miller
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Herman Miller 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 Herman Miller 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 Herman Miller, you can compare the effects of market volatilities on Washington Mutual and Herman Miller 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 Herman Miller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Herman Miller.
Diversification Opportunities for Washington Mutual and Herman Miller
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Washington and Herman is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Herman Miller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herman Miller 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 Herman Miller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herman Miller has no effect on the direction of Washington Mutual i.e., Washington Mutual and Herman Miller go up and down completely randomly.
Pair Corralation between Washington Mutual and Herman Miller
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.28 times more return on investment than Herman Miller. However, Washington Mutual Investors is 3.53 times less risky than Herman Miller. It trades about 0.05 of its potential returns per unit of risk. Herman Miller is currently generating about 0.02 per unit of risk. If you would invest 5,202 in Washington Mutual Investors on October 23, 2024 and sell it today you would earn a total of 1,099 from holding Washington Mutual Investors or generate 21.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.8% |
Values | Daily Returns |
Washington Mutual Investors vs. Herman Miller
Performance |
Timeline |
Washington Mutual |
Herman Miller |
Washington Mutual and Herman Miller Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Washington Mutual and Herman Miller
The main advantage of trading using opposite Washington Mutual and Herman Miller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Herman Miller 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 Herman Miller will offset losses from the drop in Herman Miller's long position.Washington Mutual vs. Great West Goldman Sachs | Washington Mutual vs. Gabelli Gold Fund | Washington Mutual vs. Global Gold Fund | Washington Mutual vs. The Gold Bullion |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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