Correlation Between Washington Federal and Heritage Financial
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Heritage Financial 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 Federal and Heritage Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Heritage Financial, you can compare the effects of market volatilities on Washington Federal and Heritage Financial 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 Federal with a short position of Heritage Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Heritage Financial.
Diversification Opportunities for Washington Federal and Heritage Financial
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Heritage is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Financial and Washington Federal 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 Federal are associated (or correlated) with Heritage Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Financial has no effect on the direction of Washington Federal i.e., Washington Federal and Heritage Financial go up and down completely randomly.
Pair Corralation between Washington Federal and Heritage Financial
Given the investment horizon of 90 days Washington Federal is expected to generate 1.35 times more return on investment than Heritage Financial. However, Washington Federal is 1.35 times more volatile than Heritage Financial. It trades about 0.0 of its potential returns per unit of risk. Heritage Financial is currently generating about -0.1 per unit of risk. If you would invest 2,882 in Washington Federal on January 23, 2025 and sell it today you would lose (38.00) from holding Washington Federal or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Heritage Financial
Performance |
| Timeline |
| Washington Federal |
| Heritage Financial |
Washington Federal and Heritage Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Heritage Financial
The main advantage of trading using opposite Washington Federal and Heritage Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Heritage Financial 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 Heritage Financial will offset losses from the drop in Heritage Financial's long position.| Washington Federal vs. Community West Bancshares | Washington Federal vs. First Northwest Bancorp | Washington Federal vs. First Financial Northwest | Washington Federal vs. Great Southern Bancorp |
| Heritage Financial vs. Heritage Commerce Corp | Heritage Financial vs. Horizon Bancorp | Heritage Financial vs. Independent Bank | Heritage Financial vs. Great Southern Bancorp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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