Correlation Between Washington Mutual and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Amcap 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 Amcap 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 Amcap Fund Class, you can compare the effects of market volatilities on Washington Mutual and Amcap 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 Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Amcap Fund.
Diversification Opportunities for Washington Mutual and Amcap Fund
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and Amcap is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class 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 Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Washington Mutual i.e., Washington Mutual and Amcap Fund go up and down completely randomly.
Pair Corralation between Washington Mutual and Amcap Fund
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.77 times more return on investment than Amcap Fund. However, Washington Mutual Investors is 1.29 times less risky than Amcap Fund. It trades about 0.13 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.08 per unit of risk. If you would invest 5,912 in Washington Mutual Investors on September 3, 2024 and sell it today you would earn a total of 705.00 from holding Washington Mutual Investors or generate 11.92% 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. Amcap Fund Class
Performance |
| Timeline |
| Washington Mutual |
| Amcap Fund Class |
Washington Mutual and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Amcap Fund
The main advantage of trading using opposite Washington Mutual and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Amcap 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 Amcap Fund will offset losses from the drop in Amcap Fund'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 |
| Amcap Fund vs. American Funds The | Amcap Fund vs. American Funds The | Amcap Fund vs. Growth Fund Of | Amcap Fund vs. Growth Fund Of |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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