Correlation Between Washington Mutual and Orrstown Financial
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Orrstown Financial 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 Orrstown Financial 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 Orrstown Financial Services, you can compare the effects of market volatilities on Washington Mutual and Orrstown Financial 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 Orrstown Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Orrstown Financial.
Diversification Opportunities for Washington Mutual and Orrstown Financial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Orrstown is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Orrstown Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orrstown Financial 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 Orrstown Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orrstown Financial has no effect on the direction of Washington Mutual i.e., Washington Mutual and Orrstown Financial go up and down completely randomly.
Pair Corralation between Washington Mutual and Orrstown Financial
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.51 times more return on investment than Orrstown Financial. However, Washington Mutual Investors is 1.96 times less risky than Orrstown Financial. It trades about 0.3 of its potential returns per unit of risk. Orrstown Financial Services is currently generating about 0.05 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 | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Washington Mutual Investors vs. Orrstown Financial Services
Performance |
| Timeline |
| Washington Mutual |
| Orrstown Financial |
Washington Mutual and Orrstown Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Orrstown Financial
The main advantage of trading using opposite Washington Mutual and Orrstown Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Orrstown Financial 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 Orrstown Financial will offset losses from the drop in Orrstown Financial'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 |
| Orrstown Financial vs. Home Federal Bancorp | Orrstown Financial vs. LINKBANCORP | Orrstown Financial vs. Rhinebeck Bancorp | Orrstown Financial vs. Lake Shore Bancorp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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