Correlation Between Vanguard Total and Washington Mutual

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Washington Mutual 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 Vanguard Total and Washington Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Washington Mutual Investors, you can compare the effects of market volatilities on Vanguard Total and Washington Mutual 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 Vanguard Total with a short position of Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Washington Mutual.

Diversification Opportunities for Vanguard Total and Washington Mutual

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Vanguard and Washington is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding VANGUARD TOTAL STOCK and WASHINGTON MUTUAL INVESTORS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Vanguard Total i.e., Vanguard Total and Washington Mutual go up and down completely randomly.

Pair Corralation between Vanguard Total and Washington Mutual

Assuming the 90 days horizon Vanguard Total Stock is expected to generate 1.24 times more return on investment than Washington Mutual. However, Vanguard Total is 1.24 times more volatile than Washington Mutual Investors. It trades about 0.04 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.04 per unit of risk. If you would invest  19,858  in Vanguard Total Stock on December 29, 2023 and sell it today you would earn a total of  3,860  from holding Vanguard Total Stock or generate 19.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

VANGUARD TOTAL STOCK  vs.  WASHINGTON MUTUAL INVESTORS

 Performance 
       Timeline  
Vanguard Total Stock 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Washington Mutual 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Washington Mutual Investors are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Washington Mutual may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Vanguard Total and Washington Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Washington Mutual

The main advantage of trading using opposite Vanguard Total and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.
The idea behind Vanguard Total Stock and Washington Mutual Investors 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.
Check out your portfolio center.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Fundamental Analysis
View fundamental data based on most recent published financial statements
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals