Correlation Between Washington Mutual and Novartis
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Novartis 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 Novartis 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 Novartis AG, you can compare the effects of market volatilities on Washington Mutual and Novartis 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 Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Novartis.
Diversification Opportunities for Washington Mutual and Novartis
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Washington and Novartis is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG 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 Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of Washington Mutual i.e., Washington Mutual and Novartis go up and down completely randomly.
Pair Corralation between Washington Mutual and Novartis
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.73 times more return on investment than Novartis. However, Washington Mutual Investors is 1.38 times less risky than Novartis. It trades about 0.07 of its potential returns per unit of risk. Novartis AG is currently generating about 0.04 per unit of risk. If you would invest 5,183 in Washington Mutual Investors on November 3, 2024 and sell it today you would earn a total of 1,218 from holding Washington Mutual Investors or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Washington Mutual Investors vs. Novartis AG
Performance |
| Timeline |
| Washington Mutual |
| Novartis AG |
Washington Mutual and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Novartis
The main advantage of trading using opposite Washington Mutual and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' 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 |
| Novartis vs. Roche Holding AG | Novartis vs. Nestl SA | Novartis vs. Zurich Insurance Group | Novartis vs. Swiss Re AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |