Correlation Between Washington Mutual and Bond Fund

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

By analyzing existing cross correlation between Washington Mutual Investors and Bond Fund Of, you can compare the effects of market volatilities on Washington Mutual and Bond Fund 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 Mutual with a short position of Bond Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Bond Fund.

Diversification Opportunities for Washington Mutual and Bond Fund

-0.53

Correlation Coefficient

Washington Mutual  Bond Fund

Excellent diversification

The 3 months correlation between Washington and Bond is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Bond Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund and Washington Mutual 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 Mutual Investors are associated (or correlated) with Bond Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Washington Mutual i.e., Washington Mutual and Bond Fund go up and down completely randomly.

Pair Corralation between Washington Mutual and Bond Fund

Assuming the 90 days horizon Washington Mutual Investors is expected to generate 1.61 times more return on investment than Bond Fund. However, Washington Mutual is 1.61 times more volatile than Bond Fund Of. It trades about 0.11 of its potential returns per unit of risk. Bond Fund Of is currently generating about 0.03 per unit of risk. If you would invest  4,564  in Washington Mutual Investors on September 12, 2024 and sell it today you would earn a total of  1,975  from holding Washington Mutual Investors or generate 43.27% return on investment over 90 days.

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

Washington Mutual Investors  vs.  Bond Fund Of

Washington Mutual

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Washington Mutual Investors are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Washington Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bond Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bond Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Bond Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Washington Mutual and Bond Fund

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

The idea behind Washington Mutual Investors and Bond Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.