Correlation Between Union Street and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Union Street and Washington Mutual 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 Union Street and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Street Partners and Washington Mutual Investors, you can compare the effects of market volatilities on Union Street and Washington Mutual 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 Union Street with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Street and Washington Mutual.
Diversification Opportunities for Union Street and Washington Mutual
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Union and Washington is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Union Street Partners and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Union Street 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 Union Street Partners are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Union Street i.e., Union Street and Washington Mutual go up and down completely randomly.
Pair Corralation between Union Street and Washington Mutual
Assuming the 90 days horizon Union Street Partners is expected to under-perform the Washington Mutual. In addition to that, Union Street is 1.07 times more volatile than Washington Mutual Investors. It trades about -0.21 of its total potential returns per unit of risk. Washington Mutual Investors is currently generating about -0.13 per unit of volatility. If you would invest 6,105 in Washington Mutual Investors on January 26, 2024 and sell it today you would lose (117.00) from holding Washington Mutual Investors or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Street Partners vs. Washington Mutual Investors
Performance |
| Timeline |
| Union Street Partners |
| Washington Mutual |
Union Street and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Street and Washington Mutual
The main advantage of trading using opposite Union Street and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Street position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Union Street vs. Edgewood Growth Fund | Union Street vs. Hartford Schroders Emerging | Union Street vs. HUMANA INC | Union Street 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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