Correlation Between Washington Mutual and California High
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and California High 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 California High 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 California High Yield Municipal, you can compare the effects of market volatilities on Washington Mutual and California High 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 California High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and California High.
Diversification Opportunities for Washington Mutual and California High
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Washington and California is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Washington Mutual i.e., Washington Mutual and California High go up and down completely randomly.
Pair Corralation between Washington Mutual and California High
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 3.6 times more return on investment than California High. However, Washington Mutual is 3.6 times more volatile than California High Yield Municipal. It trades about 0.05 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.07 per unit of risk. If you would invest 5,039 in Washington Mutual Investors on September 20, 2024 and sell it today you would earn a total of 1,317 from holding Washington Mutual Investors or generate 26.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Washington Mutual Investors vs. California High Yield Municipa
Performance |
| Timeline |
| Washington Mutual |
| California High Yield |
Washington Mutual and California High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and California High
The main advantage of trading using opposite Washington Mutual and California High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, California High 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 California High will offset losses from the drop in California High's long position.| Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. New World Fund |
| California High vs. Scharf Global Opportunity | California High vs. Alliancebernstein Global High | California High vs. Franklin Mutual Global | California High vs. Investec Global Franchise |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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