Correlation Between Visa and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Washington Mutual Investors, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Washington Mutual.
Diversification Opportunities for Visa and Washington Mutual
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Washington is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Visa 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 Visa Class A 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 Visa i.e., Visa and Washington Mutual go up and down completely randomly.
Pair Corralation between Visa and Washington Mutual
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.89 times more return on investment than Washington Mutual. However, Visa Class A is 1.12 times less risky than Washington Mutual. It trades about 0.14 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.04 per unit of risk. If you would invest 31,319 in Visa Class A on October 26, 2024 and sell it today you would earn a total of 1,690 from holding Visa Class A or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.5% |
| Values | Daily Returns |
Visa Class A vs. Washington Mutual Investors
Performance |
| Timeline |
| Visa Class A |
| Washington Mutual |
Visa and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Washington Mutual
The main advantage of trading using opposite Visa and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Washington Mutual vs. The Gold Bullion | Washington Mutual vs. Goldman Sachs Strategic | Washington Mutual vs. Gabelli Gold Fund | Washington Mutual vs. Deutsche Gold Precious |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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