Correlation Between Sitka Gold and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Sitka Gold 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 Sitka Gold and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sitka Gold Corp and Washington Mutual Investors, you can compare the effects of market volatilities on Sitka Gold 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 Sitka Gold with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitka Gold and Washington Mutual.
Diversification Opportunities for Sitka Gold and Washington Mutual
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sitka and Washington is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sitka Gold Corp and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Sitka Gold 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 Sitka Gold Corp 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 Sitka Gold i.e., Sitka Gold and Washington Mutual go up and down completely randomly.
Pair Corralation between Sitka Gold and Washington Mutual
Assuming the 90 days horizon Sitka Gold Corp is expected to generate 9.7 times more return on investment than Washington Mutual. However, Sitka Gold is 9.7 times more volatile than Washington Mutual Investors. It trades about 0.07 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.11 per unit of risk. If you would invest 9.51 in Sitka Gold Corp on August 31, 2024 and sell it today you would earn a total of 20.49 from holding Sitka Gold Corp or generate 215.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Sitka Gold Corp vs. Washington Mutual Investors
Performance |
| Timeline |
| Sitka Gold Corp |
| Washington Mutual |
Sitka Gold and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sitka Gold and Washington Mutual
The main advantage of trading using opposite Sitka Gold and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sitka Gold 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.| Sitka Gold vs. Aurion Resources | Sitka Gold vs. Rio2 Limited | Sitka Gold vs. Palamina Corp | Sitka Gold vs. BTU Metals Corp |
| Washington Mutual vs. The Gabelli Equity | Washington Mutual vs. Rbc Global Equity | Washington Mutual vs. Ab Select Equity | Washington Mutual vs. Jpmorgan Equity Income |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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