Correlation Between Washington Mutual and Small-cap Value
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Small-cap Value 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 Small-cap Value 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 Small Cap Value Profund, you can compare the effects of market volatilities on Washington Mutual and Small-cap Value 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 Small-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Small-cap Value.
Diversification Opportunities for Washington Mutual and Small-cap Value
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and SMALL-CAP is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Small Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Washington Mutual i.e., Washington Mutual and Small-cap Value go up and down completely randomly.
Pair Corralation between Washington Mutual and Small-cap Value
Assuming the 90 days horizon Washington Mutual is expected to generate 1.82 times less return on investment than Small-cap Value. But when comparing it to its historical volatility, Washington Mutual Investors is 1.47 times less risky than Small-cap Value. It trades about 0.04 of its potential returns per unit of risk. Small Cap Value Profund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7,911 in Small Cap Value Profund on November 3, 2024 and sell it today you would earn a total of 886.00 from holding Small Cap Value Profund or generate 11.2% 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. Small Cap Value Profund
Performance |
| Timeline |
| Washington Mutual |
| Small Cap Value |
Washington Mutual and Small-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Small-cap Value
The main advantage of trading using opposite Washington Mutual and Small-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Small-cap Value 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 Small-cap Value will offset losses from the drop in Small-cap Value'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 |
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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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