Correlation Between Tectonic Financial and Washington Federal
Can any of the company-specific risk be diversified away by investing in both Tectonic Financial and Washington Federal 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 Tectonic Financial and Washington Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tectonic Financial PR and Washington Federal, you can compare the effects of market volatilities on Tectonic Financial and Washington Federal 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 Tectonic Financial with a short position of Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Washington Federal.
Diversification Opportunities for Tectonic Financial and Washington Federal
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tectonic and Washington is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Washington Federal go up and down completely randomly.
Pair Corralation between Tectonic Financial and Washington Federal
Assuming the 90 days horizon Tectonic Financial PR is expected to generate 0.55 times more return on investment than Washington Federal. However, Tectonic Financial PR is 1.83 times less risky than Washington Federal. It trades about 0.1 of its potential returns per unit of risk. Washington Federal is currently generating about -0.1 per unit of risk. If you would invest 1,044 in Tectonic Financial PR on November 9, 2024 and sell it today you would earn a total of 24.00 from holding Tectonic Financial PR or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tectonic Financial PR vs. Washington Federal
Performance |
| Timeline |
| Tectonic Financial |
| Washington Federal |
Tectonic Financial and Washington Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tectonic Financial and Washington Federal
The main advantage of trading using opposite Tectonic Financial and Washington Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tectonic Financial position performs unexpectedly, Washington Federal 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 Federal will offset losses from the drop in Washington Federal's long position.| Tectonic Financial vs. First Guaranty Bancshares | Tectonic Financial vs. First Merchants | Tectonic Financial vs. Associated Banc Corp | Tectonic Financial vs. Bridgewater Bancshares Depositary |
| Washington Federal vs. Finward Bancorp | Washington Federal vs. Great Southern Bancorp | Washington Federal vs. First Mid Illinois | Washington Federal vs. Franklin Financial Services |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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