Correlation Between Washington Federal and Customers Bancorp

Can any of the company-specific risk be diversified away by investing in both Washington Federal and Customers Bancorp 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 Customers Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Washington Federal and Customers Bancorp, you can compare the effects of market volatilities on Washington Federal and Customers Bancorp 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 Customers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Customers Bancorp.

Diversification Opportunities for Washington Federal and Customers Bancorp

-0.75

Correlation Coefficient

Washington Federal  Customers Bancorp

Pay attention - limited upside

The 3 months correlation between Washington and Customers is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Customers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Customers Bancorp 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 Customers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Customers Bancorp has no effect on the direction of Washington Federal i.e., Washington Federal and Customers Bancorp go up and down completely randomly.

Pair Corralation between Washington Federal and Customers Bancorp

Assuming the 90 days horizon Washington Federal is expected to generate 0.46 times more return on investment than Customers Bancorp. However, Washington Federal is 2.18 times less risky than Customers Bancorp. It trades about 0.08 of its potential returns per unit of risk. Customers Bancorp is currently generating about 0.01 per unit of risk. If you would invest  1,402  in Washington Federal on September 13, 2024 and sell it today you would earn a total of  385.00  from holding Washington Federal or generate 27.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Washington Federal  vs.  Customers Bancorp

Washington Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Washington Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Washington Federal is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Customers Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Customers Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Customers Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Washington Federal and Customers Bancorp

The main advantage of trading using opposite Washington Federal and Customers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Federal position performs unexpectedly, Customers Bancorp 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 Customers Bancorp will offset losses from the drop in Customers Bancorp's long position.

The idea behind Washington Federal and Customers Bancorp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.