Correlation Between Commodities Strategy and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Washington Mutual 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 Commodities Strategy and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Washington Mutual Investors, you can compare the effects of market volatilities on Commodities Strategy and Washington Mutual 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 Commodities Strategy with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Washington Mutual.
Diversification Opportunities for Commodities Strategy and Washington Mutual
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commodities and Washington is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Washington Mutual go up and down completely randomly.
Pair Corralation between Commodities Strategy and Washington Mutual
Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Washington Mutual. In addition to that, Commodities Strategy is 1.29 times more volatile than Washington Mutual Investors. It trades about -0.04 of its total potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.28 per unit of volatility. If you would invest 6,338 in Washington Mutual Investors on September 5, 2024 and sell it today you would earn a total of 261.00 from holding Washington Mutual Investors or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Washington Mutual Investors
Performance |
| Timeline |
| Commodities Strategy |
| Washington Mutual |
Commodities Strategy and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Washington Mutual
The main advantage of trading using opposite Commodities Strategy and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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