Correlation Between Washington Mutual and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Hartford Moderate 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 Hartford Moderate 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 Hartford Moderate Allocation, you can compare the effects of market volatilities on Washington Mutual and Hartford Moderate 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 Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Hartford Moderate.
Diversification Opportunities for Washington Mutual and Hartford Moderate
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WASHINGTON and Hartford is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate 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 Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Washington Mutual i.e., Washington Mutual and Hartford Moderate go up and down completely randomly.
Pair Corralation between Washington Mutual and Hartford Moderate
Assuming the 90 days horizon Washington Mutual is expected to generate 1.06 times less return on investment than Hartford Moderate. In addition to that, Washington Mutual is 1.52 times more volatile than Hartford Moderate Allocation. It trades about 0.07 of its total potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.12 per unit of volatility. If you would invest 1,210 in Hartford Moderate Allocation on September 1, 2024 and sell it today you would earn a total of 138.00 from holding Hartford Moderate Allocation or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Hartford Moderate Allocation
Performance |
| Timeline |
| Washington Mutual |
| Hartford Moderate |
Washington Mutual and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Hartford Moderate
The main advantage of trading using opposite Washington Mutual and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Hartford Moderate 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 Hartford Moderate will offset losses from the drop in Hartford Moderate'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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