Correlation Between Income Growth and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Income Growth 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 Income Growth and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Growth Fund and Washington Mutual Investors, you can compare the effects of market volatilities on Income Growth 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 Income Growth with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Washington Mutual.
Diversification Opportunities for Income Growth and Washington Mutual
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Income and Washington is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Income Growth 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 Income Growth Fund 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 Income Growth i.e., Income Growth and Washington Mutual go up and down completely randomly.
Pair Corralation between Income Growth and Washington Mutual
Assuming the 90 days horizon Income Growth Fund is expected to under-perform the Washington Mutual. In addition to that, Income Growth is 1.03 times more volatile than Washington Mutual Investors. It trades about -0.13 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 6,153 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 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Washington Mutual Investors
Performance |
| Timeline |
| Income Growth |
| Washington Mutual |
Income Growth and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Washington Mutual
The main advantage of trading using opposite Income Growth and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth 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.| Income Growth vs. Edgewood Growth Fund | Income Growth vs. Hartford Schroders Emerging | Income Growth vs. HUMANA INC | Income Growth 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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