Correlation Between Washington Federal and Hancock Whitney

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

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

Diversification Opportunities for Washington Federal and Hancock Whitney

0.35

Correlation Coefficient

Washington Federal  Hancock Whitney

Weak diversification

The 3 months correlation between Washington and Hancock is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Hancock Whitney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hancock Whitney Corp 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 Hancock Whitney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hancock Whitney Corp has no effect on the direction of Washington Federal i.e., Washington Federal and Hancock Whitney go up and down completely randomly.

Pair Corralation between Washington Federal and Hancock Whitney

Assuming the 90 days horizon Washington Federal is expected to under-perform the Hancock Whitney. But the preferred stock apears to be less risky and, when comparing its historical volatility, Washington Federal is 1.68 times less risky than Hancock Whitney. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Hancock Whitney Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,426  in Hancock Whitney Corp on December 30, 2024 and sell it today you would lose (240.00) from holding Hancock Whitney Corp or give up 4.42% of portfolio value over 90 days.

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

Washington Federal  vs.  Hancock Whitney Corp

Washington Federal

Risk-Adjusted Performance

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Hancock Whitney Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hancock Whitney Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hancock Whitney is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Washington Federal and Hancock Whitney

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

The idea behind Washington Federal and Hancock Whitney Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.