Correlation Between Washington Mutual and Ultra Fund
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Ultra Fund 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 Ultra Fund 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 Ultra Fund R, you can compare the effects of market volatilities on Washington Mutual and Ultra Fund 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 Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Ultra Fund.
Diversification Opportunities for Washington Mutual and Ultra Fund
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and Ultra is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Ultra Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund R 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 Ultra Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Fund R has no effect on the direction of Washington Mutual i.e., Washington Mutual and Ultra Fund go up and down completely randomly.
Pair Corralation between Washington Mutual and Ultra Fund
Assuming the 90 days horizon Washington Mutual is expected to generate 1.22 times less return on investment than Ultra Fund. But when comparing it to its historical volatility, Washington Mutual Investors is 1.67 times less risky than Ultra Fund. It trades about 0.1 of its potential returns per unit of risk. Ultra Fund R is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,654 in Ultra Fund R on September 2, 2024 and sell it today you would earn a total of 2,746 from holding Ultra Fund R or generate 48.57% 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. Ultra Fund R
Performance |
| Timeline |
| Washington Mutual |
| Ultra Fund R |
Washington Mutual and Ultra Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Ultra Fund
The main advantage of trading using opposite Washington Mutual and Ultra Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Ultra Fund 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 Ultra Fund will offset losses from the drop in Ultra Fund's long position.| Washington Mutual vs. Income Fund Of | Washington Mutual vs. New World Fund | Washington Mutual vs. American Mutual Fund | Washington Mutual vs. American Mutual Fund |
| Ultra Fund vs. Mid Cap Value | Ultra Fund vs. Equity Growth Fund | Ultra Fund vs. Income Growth Fund | Ultra Fund vs. Diversified Bond Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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