Correlation Between Washington Mutual and Icon Utilities

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

Diversification Opportunities for Washington Mutual and Icon Utilities

0.63

Correlation Coefficient

Washington Mutual  Icon Utilities

Poor diversification

The 3 months correlation between Washington and Icon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Icon Utilities And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Utilities And 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 Icon Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Utilities And has no effect on the direction of Washington Mutual i.e., Washington Mutual and Icon Utilities go up and down completely randomly.

Pair Corralation between Washington Mutual and Icon Utilities

Assuming the 90 days horizon Washington Mutual is expected to generate 45.23 times less return on investment than Icon Utilities. In addition to that, Washington Mutual is 1.1 times more volatile than Icon Utilities And. It trades about 0.01 of its total potential returns per unit of risk. Icon Utilities And is currently generating about 0.56 per unit of volatility. If you would invest  967.00  in Icon Utilities And on December 2, 2024 and sell it today you would earn a total of  67.00  from holding Icon Utilities And or generate 6.93% return on investment over 90 days.

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

Washington Mutual Investors  vs.  Icon Utilities And

Washington Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Washington Mutual Investors has generated negative risk-adjusted returns adding no value to fund investors. 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.

Icon Utilities And

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Utilities And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Icon Utilities 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 Icon Utilities

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

The idea behind Washington Mutual Investors and Icon Utilities And 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..