Correlation Between Washington Mutual and Cohen Steers
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Cohen Steers 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 Cohen Steers 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 Cohen Steers Infrastructure, you can compare the effects of market volatilities on Washington Mutual and Cohen Steers 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 Cohen Steers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Cohen Steers.
Diversification Opportunities for Washington Mutual and Cohen Steers
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Washington and Cohen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Cohen Steers Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Steers Infrast 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 Cohen Steers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Steers Infrast has no effect on the direction of Washington Mutual i.e., Washington Mutual and Cohen Steers go up and down completely randomly.
Pair Corralation between Washington Mutual and Cohen Steers
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.75 times more return on investment than Cohen Steers. However, Washington Mutual Investors is 1.34 times less risky than Cohen Steers. It trades about -0.25 of its potential returns per unit of risk. Cohen Steers Infrastructure is currently generating about -0.25 per unit of risk. If you would invest 6,143 in Washington Mutual Investors on January 20, 2024 and sell it today you would lose (214.00) from holding Washington Mutual Investors or give up 3.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Washington Mutual Investors vs. Cohen Steers Infrastructure
Performance |
| Timeline |
| Washington Mutual |
| Cohen Steers Infrast |
Washington Mutual and Cohen Steers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Cohen Steers
The main advantage of trading using opposite Washington Mutual and Cohen Steers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Cohen Steers 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 Cohen Steers will offset losses from the drop in Cohen Steers' long position.| Washington Mutual vs. Growth Fund Of | Washington Mutual vs. Europacific Growth Fund | Washington Mutual vs. Smallcap World Fund | Washington Mutual vs. New World Fund |
| Cohen Steers vs. Vanguard Total Stock | Cohen Steers vs. Vanguard 500 Index | Cohen Steers vs. Vanguard Total Stock | Cohen Steers vs. Vanguard Total Stock |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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