Correlation Between Washington Mutual and Nisshinbo Holdings
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Nisshinbo Holdings 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 Nisshinbo Holdings 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 Nisshinbo Holdings, you can compare the effects of market volatilities on Washington Mutual and Nisshinbo Holdings 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 Nisshinbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Nisshinbo Holdings.
Diversification Opportunities for Washington Mutual and Nisshinbo Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Washington and Nisshinbo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Nisshinbo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nisshinbo Holdings 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 Nisshinbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nisshinbo Holdings has no effect on the direction of Washington Mutual i.e., Washington Mutual and Nisshinbo Holdings go up and down completely randomly.
Pair Corralation between Washington Mutual and Nisshinbo Holdings
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.57 times more return on investment than Nisshinbo Holdings. However, Washington Mutual Investors is 1.76 times less risky than Nisshinbo Holdings. It trades about 0.29 of its potential returns per unit of risk. Nisshinbo Holdings is currently generating about 0.01 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 | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Washington Mutual Investors vs. Nisshinbo Holdings
Performance |
| Timeline |
| Washington Mutual |
| Nisshinbo Holdings |
Washington Mutual and Nisshinbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Nisshinbo Holdings
The main advantage of trading using opposite Washington Mutual and Nisshinbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Nisshinbo Holdings 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 Nisshinbo Holdings will offset losses from the drop in Nisshinbo Holdings' long position.| Washington Mutual vs. Neuberger Berman Real | Washington Mutual vs. Dunham Real Estate | Washington Mutual vs. Real Estate Ultrasector | Washington Mutual vs. Texton Property |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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