Correlation Between Washington Trust and Crazy Woman

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

By analyzing existing cross correlation between Washington Trust Bancorp and Crazy Woman Creek, you can compare the effects of market volatilities on Washington Trust and Crazy Woman 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 Trust with a short position of Crazy Woman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Trust and Crazy Woman.

Diversification Opportunities for Washington Trust and Crazy Woman

-0.68

Correlation Coefficient

Washington Trust  Crazy Woman

Excellent diversification

The 3 months correlation between Washington and Crazy is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Washington Trust Bancorp and Crazy Woman Creek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crazy Woman Creek and Washington Trust 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 Trust Bancorp are associated (or correlated) with Crazy Woman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crazy Woman Creek has no effect on the direction of Washington Trust i.e., Washington Trust and Crazy Woman go up and down completely randomly.

Pair Corralation between Washington Trust and Crazy Woman

If you would invest  2,350  in Crazy Woman Creek on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Crazy Woman Creek or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Washington Trust Bancorp  vs.  Crazy Woman Creek

Washington Trust Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Washington Trust Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Washington Trust is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Crazy Woman Creek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crazy Woman Creek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Crazy Woman is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Washington Trust and Crazy Woman

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

The idea behind Washington Trust Bancorp and Crazy Woman Creek 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.