Correlation Between Washington Mutual and Vanguard Institutional
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Vanguard Institutional 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 Vanguard Institutional 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 Vanguard Institutional Index, you can compare the effects of market volatilities on Washington Mutual and Vanguard Institutional 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 Vanguard Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Vanguard Institutional.
Diversification Opportunities for Washington Mutual and Vanguard Institutional
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Washington and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Vanguard Institutional Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Institutional 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 Vanguard Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Institutional has no effect on the direction of Washington Mutual i.e., Washington Mutual and Vanguard Institutional go up and down completely randomly.
Pair Corralation between Washington Mutual and Vanguard Institutional
Assuming the 90 days horizon Washington Mutual Investors is expected to under-perform the Vanguard Institutional. But the mutual fund apears to be less risky and, when comparing its historical volatility, Washington Mutual Investors is 1.13 times less risky than Vanguard Institutional. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Vanguard Institutional Index is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 42,358 in Vanguard Institutional Index on January 16, 2024 and sell it today you would lose (685.00) from holding Vanguard Institutional Index or give up 1.62% 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. Vanguard Institutional Index
Performance |
| Timeline |
| Washington Mutual |
| Vanguard Institutional |
Washington Mutual and Vanguard Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Vanguard Institutional
The main advantage of trading using opposite Washington Mutual and Vanguard Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Vanguard Institutional 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 Vanguard Institutional will offset losses from the drop in Vanguard Institutional's long position.| Washington Mutual vs. American Mutual Fund | Washington Mutual vs. American Mutual Fund | Washington Mutual vs. American Funds Income | Washington Mutual vs. American Funds Preservation |
| Vanguard Institutional vs. Vanguard Global Esg | Vanguard Institutional vs. Vanguard ESG Stock | Vanguard Institutional vs. Vanguard Mid Cap Value | Vanguard Institutional vs. Vanguard Dividend Appreciation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |