Correlation Between Washington Mutual and Redwood Systematic
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Redwood Systematic 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 Redwood Systematic 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 Redwood Systematic Macro, you can compare the effects of market volatilities on Washington Mutual and Redwood Systematic 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 Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Redwood Systematic.
Diversification Opportunities for Washington Mutual and Redwood Systematic
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Redwood is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro 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 Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Washington Mutual i.e., Washington Mutual and Redwood Systematic go up and down completely randomly.
Pair Corralation between Washington Mutual and Redwood Systematic
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.99 times more return on investment than Redwood Systematic. However, Washington Mutual Investors is 1.01 times less risky than Redwood Systematic. It trades about 0.29 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about 0.14 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 | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Redwood Systematic Macro
Performance |
| Timeline |
| Washington Mutual |
| Redwood Systematic Macro |
Washington Mutual and Redwood Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Redwood Systematic
The main advantage of trading using opposite Washington Mutual and Redwood Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Redwood Systematic 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 Redwood Systematic will offset losses from the drop in Redwood Systematic'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 |
| Redwood Systematic vs. Us Government Securities | Redwood Systematic vs. Ridgeworth Seix Government | Redwood Systematic vs. Lord Abbett Government | Redwood Systematic vs. Davis Government Bond |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |