Correlation Between Washington Federal and Old National
Can any of the company-specific risk be diversified away by investing in both Washington Federal and Old National 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 Old National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Old National Bancorp, you can compare the effects of market volatilities on Washington Federal and Old National 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 Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Old National.
Diversification Opportunities for Washington Federal and Old National
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Washington and Old is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp 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 Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Washington Federal i.e., Washington Federal and Old National go up and down completely randomly.
Pair Corralation between Washington Federal and Old National
Assuming the 90 days horizon Washington Federal is expected to under-perform the Old National. In addition to that, Washington Federal is 2.22 times more volatile than Old National Bancorp. It trades about -0.02 of its total potential returns per unit of risk. Old National Bancorp is currently generating about 0.11 per unit of volatility. If you would invest 2,500 in Old National Bancorp on September 2, 2024 and sell it today you would earn a total of 37.00 from holding Old National Bancorp or generate 1.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Federal vs. Old National Bancorp
Performance |
| Timeline |
| Washington Federal |
| Old National Bancorp |
Washington Federal and Old National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Federal and Old National
The main advantage of trading using opposite Washington Federal and Old National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Old National 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 Old National will offset losses from the drop in Old National's long position.| Washington Federal vs. KeyCorp | Washington Federal vs. KeyCorp | Washington Federal vs. Fifth Third Bancorp | Washington Federal vs. Citizens Financial Group |
| Old National vs. KeyCorp | Old National vs. KeyCorp | Old National vs. Fifth Third Bancorp | Old National vs. Citizens Financial Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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