Correlation Between Washington Mutual and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Europacific 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 Europacific 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 Europacific Growth Fund, you can compare the effects of market volatilities on Washington Mutual and Europacific 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 Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Europacific Growth.
Diversification Opportunities for Washington Mutual and Europacific Growth
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Washington and Europacific is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific 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 Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of Washington Mutual i.e., Washington Mutual and Europacific Growth go up and down completely randomly.
Pair Corralation between Washington Mutual and Europacific Growth
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 1.06 times more return on investment than Europacific Growth. However, Washington Mutual is 1.06 times more volatile than Europacific Growth Fund. It trades about 0.01 of its potential returns per unit of risk. Europacific Growth Fund is currently generating about -0.23 per unit of risk. If you would invest 6,501 in Washington Mutual Investors on August 23, 2024 and sell it today you would earn a total of 4.00 from holding Washington Mutual Investors or generate 0.06% 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. Europacific Growth Fund
Performance |
| Timeline |
| Washington Mutual |
| Europacific Growth |
Washington Mutual and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Europacific Growth
The main advantage of trading using opposite Washington Mutual and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Europacific 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 Europacific Growth will offset losses from the drop in Europacific Growth's long position.| Washington Mutual vs. Vanguard Small Cap Index | Washington Mutual vs. Vanguard Mid Cap Index | Washington Mutual vs. ABIVAX Socit Anonyme | Washington Mutual vs. SCOR PK |
| Europacific Growth vs. Growth Fund Of | Europacific Growth vs. Vanguard Institutional Index | Europacific Growth vs. Vanguard Mid Cap Index | Europacific Growth vs. Washington Mutual Investors |
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.
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