Correlation Between Washington Mutual and IShares Canadian
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and IShares Canadian 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 IShares Canadian 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 iShares Canadian Universe, you can compare the effects of market volatilities on Washington Mutual and IShares Canadian 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 IShares Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and IShares Canadian.
Diversification Opportunities for Washington Mutual and IShares Canadian
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Washington and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and iShares Canadian Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Canadian Universe 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 IShares Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Canadian Universe has no effect on the direction of Washington Mutual i.e., Washington Mutual and IShares Canadian go up and down completely randomly.
Pair Corralation between Washington Mutual and IShares Canadian
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 1.7 times more return on investment than IShares Canadian. However, Washington Mutual is 1.7 times more volatile than iShares Canadian Universe. It trades about 0.05 of its potential returns per unit of risk. iShares Canadian Universe is currently generating about 0.03 per unit of risk. If you would invest 5,202 in Washington Mutual Investors on October 23, 2024 and sell it today you would earn a total of 1,099 from holding Washington Mutual Investors or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. iShares Canadian Universe
Performance |
| Timeline |
| Washington Mutual |
| iShares Canadian Universe |
Washington Mutual and IShares Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and IShares Canadian
The main advantage of trading using opposite Washington Mutual and IShares Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, IShares Canadian 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 IShares Canadian will offset losses from the drop in IShares Canadian's long position.| Washington Mutual vs. Great West Goldman Sachs | Washington Mutual vs. Gabelli Gold Fund | Washington Mutual vs. Global Gold Fund | Washington Mutual vs. The Gold Bullion |
| IShares Canadian vs. iShares Canadian Short | IShares Canadian vs. iShares MSCI EAFE | IShares Canadian vs. iShares Core Canadian | IShares Canadian vs. iShares Canadian Real |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |