Correlation Between Washington Mutual and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Aqr Small 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 Aqr Small 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 Aqr Small Cap, you can compare the effects of market volatilities on Washington Mutual and Aqr Small 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 Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Aqr Small.
Diversification Opportunities for Washington Mutual and Aqr Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Aqr is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap 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 Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Washington Mutual i.e., Washington Mutual and Aqr Small go up and down completely randomly.
Pair Corralation between Washington Mutual and Aqr Small
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.53 times more return on investment than Aqr Small. However, Washington Mutual Investors is 1.89 times less risky than Aqr Small. It trades about 0.25 of its potential returns per unit of risk. Aqr Small Cap is currently generating about 0.03 per unit of risk. If you would invest 6,196 in Washington Mutual Investors on November 4, 2024 and sell it today you would earn a total of 205.00 from holding Washington Mutual Investors or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Aqr Small Cap
Performance |
| Timeline |
| Washington Mutual |
| Aqr Small Cap |
Washington Mutual and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Aqr Small
The main advantage of trading using opposite Washington Mutual and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Aqr Small 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 Aqr Small will offset losses from the drop in Aqr Small's 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 Stocks Directory module to find actively traded stocks across global markets.
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