Correlation Between Washington Federal and Meridian Bank
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Meridian Bank 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 Meridian Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Meridian Bank, you can compare the effects of market volatilities on Washington Federal and Meridian Bank 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 Meridian Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Meridian Bank.
Diversification Opportunities for Washington Federal and Meridian Bank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Washington and Meridian is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Meridian Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Bank 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 Meridian Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Bank has no effect on the direction of Washington Federal i.e., Washington Federal and Meridian Bank go up and down completely randomly.
Pair Corralation between Washington Federal and Meridian Bank
Assuming the 90 days horizon Washington Federal is expected to under-perform the Meridian Bank. But the preferred stock apears to be less risky and, when comparing its historical volatility, Washington Federal is 1.44 times less risky than Meridian Bank. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Meridian Bank is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,155 in Meridian Bank on November 2, 2024 and sell it today you would earn a total of 506.00 from holding Meridian Bank or generate 43.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Meridian Bank
Performance |
| Timeline |
| Washington Federal |
| Meridian Bank |
Washington Federal and Meridian Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Meridian Bank
The main advantage of trading using opposite Washington Federal and Meridian Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Meridian Bank 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 Meridian Bank will offset losses from the drop in Meridian Bank's long position.| Washington Federal vs. Texas Capital Bancshares | Washington Federal vs. First Guaranty Bancshares | Washington Federal vs. Aquagold International | Washington Federal vs. Morningstar Unconstrained Allocation |
| Meridian Bank vs. Community West Bancshares | Meridian Bank vs. Investar Holding Corp | Meridian Bank vs. Finward Bancorp | Meridian Bank vs. First Financial Northwest |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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