Correlation Between Washington Mutual and Blackrock Small
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Blackrock Small 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 Blackrock Small 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 Blackrock Small Cap, you can compare the effects of market volatilities on Washington Mutual and Blackrock Small 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 Blackrock Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Blackrock Small.
Diversification Opportunities for Washington Mutual and Blackrock Small
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Blackrock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Blackrock Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Small Cap 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 Blackrock Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Small Cap has no effect on the direction of Washington Mutual i.e., Washington Mutual and Blackrock Small go up and down completely randomly.
Pair Corralation between Washington Mutual and Blackrock Small
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.58 times more return on investment than Blackrock Small. However, Washington Mutual Investors is 1.72 times less risky than Blackrock Small. It trades about 0.07 of its potential returns per unit of risk. Blackrock Small Cap is currently generating about 0.04 per unit of risk. If you would invest 4,918 in Washington Mutual Investors on November 28, 2024 and sell it today you would earn a total of 1,436 from holding Washington Mutual Investors or generate 29.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Blackrock Small Cap
Performance |
| Timeline |
| Washington Mutual |
| Blackrock Small Cap |
Washington Mutual and Blackrock Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Blackrock Small
The main advantage of trading using opposite Washington Mutual and Blackrock Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Blackrock Small 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 Blackrock Small will offset losses from the drop in Blackrock Small's long position.| Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. Investment Of America |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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