Correlation Between Washington Business and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Washington Business and Bank Mandiri 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 Business and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Business Bank and Bank Mandiri Persero, you can compare the effects of market volatilities on Washington Business and Bank Mandiri 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 Business with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Business and Bank Mandiri.
Diversification Opportunities for Washington Business and Bank Mandiri
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Washington and Bank is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Washington Business Bank and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero and Washington Business 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 Business Bank are associated (or correlated) with Bank Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of Washington Business i.e., Washington Business and Bank Mandiri go up and down completely randomly.
Pair Corralation between Washington Business and Bank Mandiri
Given the investment horizon of 90 days Washington Business Bank is expected to generate 0.28 times more return on investment than Bank Mandiri. However, Washington Business Bank is 3.54 times less risky than Bank Mandiri. It trades about 0.22 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.04 per unit of risk. If you would invest 3,275 in Washington Business Bank on September 3, 2024 and sell it today you would earn a total of 325.00 from holding Washington Business Bank or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Washington Business Bank vs. Bank Mandiri Persero
Performance |
| Timeline |
| Washington Business Bank |
| Bank Mandiri Persero |
Washington Business and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Business and Bank Mandiri
The main advantage of trading using opposite Washington Business and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Business position performs unexpectedly, Bank Mandiri 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 Bank Mandiri will offset losses from the drop in Bank Mandiri's long position.| Washington Business vs. First Hawaiian | Washington Business vs. Central Pacific Financial | Washington Business vs. Territorial Bancorp | Washington Business vs. Comerica |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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