Correlation Between Washington Mutual and Pace Large
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Pace Large 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 Pace Large 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 Pace Large Growth, you can compare the effects of market volatilities on Washington Mutual and Pace Large 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 Pace Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Pace Large.
Diversification Opportunities for Washington Mutual and Pace Large
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WASHINGTON and Pace is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Pace Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Growth 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 Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Growth has no effect on the direction of Washington Mutual i.e., Washington Mutual and Pace Large go up and down completely randomly.
Pair Corralation between Washington Mutual and Pace Large
Assuming the 90 days horizon Washington Mutual is expected to generate 1.47 times less return on investment than Pace Large. But when comparing it to its historical volatility, Washington Mutual Investors is 1.4 times less risky than Pace Large. It trades about 0.07 of its potential returns per unit of risk. Pace Large Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,532 in Pace Large Growth on September 1, 2024 and sell it today you would earn a total of 236.00 from holding Pace Large Growth or generate 15.4% 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. Pace Large Growth
Performance |
| Timeline |
| Washington Mutual |
| Pace Large Growth |
Washington Mutual and Pace Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Pace Large
The main advantage of trading using opposite Washington Mutual and Pace Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Pace Large 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 Pace Large will offset losses from the drop in Pace Large'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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