Correlation Between Washington Trust and First Foundation
Can any of the company-specific risk be diversified away by investing in both Washington Trust and First Foundation 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 Trust and First Foundation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Trust Bancorp and First Foundation, you can compare the effects of market volatilities on Washington Trust and First Foundation 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 Trust with a short position of First Foundation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and First Foundation.
Diversification Opportunities for Washington Trust and First Foundation
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation and Washington Trust 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 Trust Bancorp are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of Washington Trust i.e., Washington Trust and First Foundation go up and down completely randomly.
Pair Corralation between Washington Trust and First Foundation
Given the investment horizon of 90 days Washington Trust Bancorp is expected to generate 0.52 times more return on investment than First Foundation. However, Washington Trust Bancorp is 1.92 times less risky than First Foundation. It trades about 0.0 of its potential returns per unit of risk. First Foundation is currently generating about 0.0 per unit of risk. If you would invest 4,247 in Washington Trust Bancorp on September 3, 2024 and sell it today you would lose (533.00) from holding Washington Trust Bancorp or give up 12.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Trust Bancorp vs. First Foundation
Performance |
| Timeline |
| Washington Trust Bancorp |
| First Foundation |
Washington Trust and First Foundation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Trust and First Foundation
The main advantage of trading using opposite Washington Trust and First Foundation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Trust position performs unexpectedly, First Foundation 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 First Foundation will offset losses from the drop in First Foundation's long position.| Washington Trust vs. JPMorgan Chase Co | Washington Trust vs. Citigroup | Washington Trust vs. Wells Fargo | Washington Trust vs. Toronto Dominion Bank |
| First Foundation vs. Veritex Holdings | First Foundation vs. ConnectOne Bancorp | First Foundation vs. The First Bancshares, | First Foundation vs. First Mid Illinois |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |