Correlation Between Washington Mutual and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Old Westbury 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 Old Westbury 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 Old Westbury Large, you can compare the effects of market volatilities on Washington Mutual and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Old Westbury.
Diversification Opportunities for Washington Mutual and Old Westbury
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WASHINGTON and Old is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Washington Mutual i.e., Washington Mutual and Old Westbury go up and down completely randomly.
Pair Corralation between Washington Mutual and Old Westbury
Assuming the 90 days horizon Washington Mutual is expected to generate 1.03 times less return on investment than Old Westbury. In addition to that, Washington Mutual is 1.15 times more volatile than Old Westbury Large. It trades about 0.27 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.31 per unit of volatility. If you would invest 2,055 in Old Westbury Large on September 1, 2024 and sell it today you would earn a total of 83.00 from holding Old Westbury Large or generate 4.04% 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. Old Westbury Large
Performance |
| Timeline |
| Washington Mutual |
| Old Westbury Large |
Washington Mutual and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Old Westbury
The main advantage of trading using opposite Washington Mutual and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury'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 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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