Correlation Between Washington Mutual and The Hartford
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and The Hartford 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 Mutual and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and The Hartford Small, you can compare the effects of market volatilities on Washington Mutual and The Hartford 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 Mutual with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and The Hartford.
Diversification Opportunities for Washington Mutual and The Hartford
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and The is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and Washington Mutual 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 Mutual Investors are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Washington Mutual i.e., Washington Mutual and The Hartford go up and down completely randomly.
Pair Corralation between Washington Mutual and The Hartford
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.59 times more return on investment than The Hartford. However, Washington Mutual Investors is 1.7 times less risky than The Hartford. It trades about 0.1 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.06 per unit of risk. If you would invest 4,719 in Washington Mutual Investors on September 4, 2024 and sell it today you would earn a total of 1,876 from holding Washington Mutual Investors or generate 39.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. The Hartford Small
Performance |
| Timeline |
| Washington Mutual |
| Hartford Small |
Washington Mutual and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and The Hartford
The main advantage of trading using opposite Washington Mutual and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Washington Mutual vs. Franklin High Yield | Washington Mutual vs. Limited Term Tax | Washington Mutual vs. Vanguard California Long Term | Washington Mutual vs. Bbh Intermediate Municipal |
| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. Hartford Growth Opportunities |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |