Correlation Between Washington Federal and Peoples Bancorp

Can any of the company-specific risk be diversified away by investing in both Washington Federal and Peoples 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 Peoples 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 Peoples Bancorp of, you can compare the effects of market volatilities on Washington Federal and Peoples 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 Peoples Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Federal and Peoples Bancorp.

Diversification Opportunities for Washington Federal and Peoples Bancorp

-0.83

Correlation Coefficient

Washington Federal  Peoples Bancorp

Pay attention - limited upside

The 3 months correlation between Washington and Peoples is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Washington Federal and Peoples Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples 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 Peoples Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Bancorp has no effect on the direction of Washington Federal i.e., Washington Federal and Peoples Bancorp go up and down completely randomly.

Pair Corralation between Washington Federal and Peoples Bancorp

Assuming the 90 days horizon Washington Federal is expected to generate 0.79 times more return on investment than Peoples Bancorp. However, Washington Federal is 1.26 times less risky than Peoples Bancorp. It trades about -0.15 of its potential returns per unit of risk. Peoples Bancorp of is currently generating about -0.37 per unit of risk. If you would invest  1,756  in Washington Federal on October 12, 2024 and sell it today you would lose (64.00) from holding Washington Federal or give up 3.64% of portfolio value over 90 days.

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

Washington Federal  vs.  Peoples Bancorp of

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 weak performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Peoples Bancorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Peoples Bancorp of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady fundamental drivers, Peoples Bancorp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Washington Federal and Peoples Bancorp

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

The idea behind Washington Federal and Peoples Bancorp of 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.