Correlation Between Washington Mutual and Ab Growth
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Ab Growth 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 Ab Growth 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 Ab Growth Fund, you can compare the effects of market volatilities on Washington Mutual and Ab Growth 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 Ab Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Ab Growth.
Diversification Opportunities for Washington Mutual and Ab Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and AGRFX is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Ab Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Growth Fund 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 Ab Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Growth Fund has no effect on the direction of Washington Mutual i.e., Washington Mutual and Ab Growth go up and down completely randomly.
Pair Corralation between Washington Mutual and Ab Growth
Assuming the 90 days horizon Washington Mutual is expected to generate 2.46 times less return on investment than Ab Growth. But when comparing it to its historical volatility, Washington Mutual Investors is 1.5 times less risky than Ab Growth. It trades about 0.14 of its potential returns per unit of risk. Ab Growth Fund is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 11,621 in Ab Growth Fund on September 3, 2024 and sell it today you would earn a total of 1,752 from holding Ab Growth Fund or generate 15.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Ab Growth Fund
Performance |
| Timeline |
| Washington Mutual |
| Ab Growth Fund |
Washington Mutual and Ab Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Ab Growth
The main advantage of trading using opposite Washington Mutual and Ab Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Ab Growth 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 Ab Growth will offset losses from the drop in Ab Growth's long position.| Washington Mutual vs. Vanguard Total Stock | Washington Mutual vs. Vanguard 500 Index | Washington Mutual vs. Vanguard Total Stock | Washington Mutual vs. Vanguard Total Stock |
| Ab Growth vs. T Rowe Price | Ab Growth vs. Fa 529 Aggressive | Ab Growth vs. Ab Value Fund | Ab Growth vs. Leggmason Partners Institutional |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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