Correlation Between Washington Mutual and Chase Growth
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Chase 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 Chase 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 Chase Growth Fund, you can compare the effects of market volatilities on Washington Mutual and Chase 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 Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Chase Growth.
Diversification Opportunities for Washington Mutual and Chase Growth
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Chase is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth 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 Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of Washington Mutual i.e., Washington Mutual and Chase Growth go up and down completely randomly.
Pair Corralation between Washington Mutual and Chase Growth
Assuming the 90 days horizon Washington Mutual is expected to generate 7.09 times less return on investment than Chase Growth. But when comparing it to its historical volatility, Washington Mutual Investors is 1.45 times less risky than Chase Growth. It trades about 0.04 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,657 in Chase Growth Fund on August 24, 2024 and sell it today you would earn a total of 79.00 from holding Chase Growth Fund or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Washington Mutual Investors vs. Chase Growth Fund
Performance |
| Timeline |
| Washington Mutual |
| Chase Growth |
Washington Mutual and Chase Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Chase Growth
The main advantage of trading using opposite Washington Mutual and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Chase 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 Chase Growth will offset losses from the drop in Chase Growth's long position.| Washington Mutual vs. Goldman Sachs High | Washington Mutual vs. Pioneer High Income | Washington Mutual vs. Morningstar Aggressive Growth | Washington Mutual vs. Metropolitan West High |
| Chase Growth vs. HUMANA INC | Chase Growth vs. Aquagold International | Chase Growth vs. Barloworld Ltd ADR | Chase Growth vs. Morningstar Unconstrained Allocation |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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