Correlation Between Washington Mutual and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Fidelity Total 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 Fidelity Total 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 Fidelity Total Market, you can compare the effects of market volatilities on Washington Mutual and Fidelity Total 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 Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Fidelity Total.
Diversification Opportunities for Washington Mutual and Fidelity Total
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Washington and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Fidelity Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Market 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 Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Market has no effect on the direction of Washington Mutual i.e., Washington Mutual and Fidelity Total go up and down completely randomly.
Pair Corralation between Washington Mutual and Fidelity Total
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.86 times more return on investment than Fidelity Total. However, Washington Mutual Investors is 1.16 times less risky than Fidelity Total. It trades about -0.14 of its potential returns per unit of risk. Fidelity Total Market is currently generating about -0.16 per unit of risk. If you would invest 6,158 in Washington Mutual Investors on January 25, 2024 and sell it today you would lose (129.00) from holding Washington Mutual Investors or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Fidelity Total Market
Performance |
| Timeline |
| Washington Mutual |
| Fidelity Total Market |
Washington Mutual and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Fidelity Total
The main advantage of trading using opposite Washington Mutual and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Fidelity Total 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 Fidelity Total will offset losses from the drop in Fidelity Total's long position.The idea behind Washington Mutual Investors and Fidelity Total Market pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fidelity Total vs. Vanguard Total Stock | Fidelity Total vs. Vanguard 500 Index | Fidelity Total vs. Vanguard Total Stock | Fidelity Total vs. Vanguard Total Stock |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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