Correlation Between Foundry Partners and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Foundry Partners 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 Foundry Partners and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foundry Partners Fundamental and Washington Mutual Investors, you can compare the effects of market volatilities on Foundry Partners 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 Foundry Partners with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foundry Partners and Washington Mutual.
Diversification Opportunities for Foundry Partners and Washington Mutual
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foundry and Washington is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Foundry Partners Fundamental and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Foundry Partners 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 Foundry Partners Fundamental 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 Foundry Partners i.e., Foundry Partners and Washington Mutual go up and down completely randomly.
Pair Corralation between Foundry Partners and Washington Mutual
Assuming the 90 days horizon Foundry Partners Fundamental is expected to generate 1.8 times more return on investment than Washington Mutual. However, Foundry Partners is 1.8 times more volatile than Washington Mutual Investors. It trades about 0.12 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.18 per unit of risk. If you would invest 1,950 in Foundry Partners Fundamental on February 24, 2024 and sell it today you would earn a total of 329.00 from holding Foundry Partners Fundamental or generate 16.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.2% |
Values | Daily Returns |
Foundry Partners Fundamental vs. Washington Mutual Investors
Performance |
Timeline |
Foundry Partners Fun |
Washington Mutual |
Foundry Partners and Washington Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Foundry Partners and Washington Mutual
The main advantage of trading using opposite Foundry Partners and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foundry Partners 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.Foundry Partners vs. HUMANA INC | Foundry Partners vs. Aquagold International | Foundry Partners vs. Barloworld Ltd ADR | Foundry Partners vs. Morningstar Unconstrained Allocation |
Washington Mutual vs. Vanguard Total Stock | Washington Mutual vs. Vanguard Total Stock | Washington Mutual vs. Vanguard Total Stock | Washington Mutual vs. Vanguard 500 Index |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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