Correlation Between Wmcanx and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Wmcanx and Washington Mutual 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 Wmcanx and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wmcanx and Washington Mutual Investors, you can compare the effects of market volatilities on Wmcanx and Washington Mutual 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 Wmcanx with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wmcanx and Washington Mutual.
Diversification Opportunities for Wmcanx and Washington Mutual
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wmcanx and Washington is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Wmcanx and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Wmcanx 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 Wmcanx are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Wmcanx i.e., Wmcanx and Washington Mutual go up and down completely randomly.
Pair Corralation between Wmcanx and Washington Mutual
Assuming the 90 days trading horizon Wmcanx is expected to generate 1.05 times more return on investment than Washington Mutual. However, Wmcanx is 1.05 times more volatile than Washington Mutual Investors. It trades about 0.14 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.13 per unit of risk. If you would invest 1,662 in Wmcanx on October 22, 2024 and sell it today you would earn a total of 22.00 from holding Wmcanx or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.22% |
| Values | Daily Returns |
Wmcanx vs. Washington Mutual Investors
Performance |
| Timeline |
| Wmcanx |
| Washington Mutual |
Wmcanx and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wmcanx and Washington Mutual
The main advantage of trading using opposite Wmcanx and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wmcanx position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Wmcanx vs. Ashmore Emerging Markets | Wmcanx vs. Franklin Emerging Market | Wmcanx vs. Calvert Developed Market | Wmcanx vs. Barings Emerging Markets |
| Washington Mutual vs. Qs Large Cap | Washington Mutual vs. Fpddjx | Washington Mutual vs. Wmcanx | Washington Mutual vs. Fa 529 Aggressive |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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