Correlation Between Washington Mutual and Virtus Kar
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Virtus Kar 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 Virtus Kar 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 Virtus Kar Small Cap, you can compare the effects of market volatilities on Washington Mutual and Virtus Kar 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 Virtus Kar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Virtus Kar.
Diversification Opportunities for Washington Mutual and Virtus Kar
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Virtus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of Washington Mutual i.e., Washington Mutual and Virtus Kar go up and down completely randomly.
Pair Corralation between Washington Mutual and Virtus Kar
Assuming the 90 days horizon Washington Mutual is expected to generate 1.46 times less return on investment than Virtus Kar. But when comparing it to its historical volatility, Washington Mutual Investors is 1.69 times less risky than Virtus Kar. It trades about 0.14 of its potential returns per unit of risk. Virtus Kar Small Cap is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,416 in Virtus Kar Small Cap on September 3, 2024 and sell it today you would earn a total of 526.00 from holding Virtus Kar Small Cap or generate 21.77% 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. Virtus Kar Small Cap
Performance |
| Timeline |
| Washington Mutual |
| Virtus Kar Small |
Washington Mutual and Virtus Kar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Virtus Kar
The main advantage of trading using opposite Washington Mutual and Virtus Kar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Virtus Kar 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 Virtus Kar will offset losses from the drop in Virtus Kar's long position.| Washington Mutual vs. Ab Small Cap | Washington Mutual vs. Touchstone Small Cap | Washington Mutual vs. Us Small Cap | Washington Mutual vs. Qs Small Capitalization |
| Virtus Kar vs. The Hartford Midcap | Virtus Kar vs. Mfs Emerging Markets | Virtus Kar vs. Wells Fargo Special | Virtus Kar vs. Washington Mutual Investors |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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