Correlation Between Washington Federal and Equitable

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Can any of the company-specific risk be diversified away by investing in both Washington Federal and Equitable 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 Federal and Equitable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Federal and Equitable Group, you can compare the effects of market volatilities on Washington Federal and Equitable 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 Federal with a short position of Equitable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Equitable.

Diversification Opportunities for Washington Federal and Equitable

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Washington and Equitable is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group and Washington Federal 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 Federal are associated (or correlated) with Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Washington Federal i.e., Washington Federal and Equitable go up and down completely randomly.

Pair Corralation between Washington Federal and Equitable

Given the investment horizon of 90 days Washington Federal is expected to under-perform the Equitable. But the stock apears to be less risky and, when comparing its historical volatility, Washington Federal is 1.52 times less risky than Equitable. The stock trades about -0.31 of its potential returns per unit of risk. The Equitable Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,270  in Equitable Group on October 12, 2024 and sell it today you would lose (45.00) from holding Equitable Group or give up 0.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Washington Federal  vs.  Equitable Group

 Performance 
       Timeline  
Washington Federal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Washington Federal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Equitable Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Equitable Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equitable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Washington Federal and Equitable Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Washington Federal and Equitable

The main advantage of trading using opposite Washington Federal and Equitable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Equitable 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 Equitable will offset losses from the drop in Equitable's long position.
The idea behind Washington Federal and Equitable Group 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.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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