Correlation Between Washington Mutual and Direxion Monthly
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Direxion Monthly 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 Direxion Monthly 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 Direxion Monthly Sp, you can compare the effects of market volatilities on Washington Mutual and Direxion Monthly 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 Direxion Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Direxion Monthly.
Diversification Opportunities for Washington Mutual and Direxion Monthly
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Washington and Direxion is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Direxion Monthly Sp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Monthly 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 Direxion Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Monthly has no effect on the direction of Washington Mutual i.e., Washington Mutual and Direxion Monthly go up and down completely randomly.
Pair Corralation between Washington Mutual and Direxion Monthly
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.21 times more return on investment than Direxion Monthly. However, Washington Mutual Investors is 4.76 times less risky than Direxion Monthly. It trades about -0.05 of its potential returns per unit of risk. Direxion Monthly Sp is currently generating about -0.13 per unit of risk. If you would invest 6,512 in Washington Mutual Investors on September 13, 2024 and sell it today you would lose (32.00) from holding Washington Mutual Investors or give up 0.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Direxion Monthly Sp
Performance |
| Timeline |
| Washington Mutual |
| Direxion Monthly |
Washington Mutual and Direxion Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Direxion Monthly
The main advantage of trading using opposite Washington Mutual and Direxion Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Direxion Monthly 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 Direxion Monthly will offset losses from the drop in Direxion Monthly'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 |
| Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Nasdaq 100 2x Strategy | Direxion Monthly vs. Ultra Nasdaq 100 Profunds | Direxion Monthly vs. Aquagold International |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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