Correlation Between Tectonic Financial and Washington Federal

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

By analyzing existing cross correlation between Tectonic Financial PR and Washington Federal, you can compare the effects of market volatilities on Tectonic Financial and Washington Federal 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 Tectonic Financial with a short position of Washington Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tectonic Financial and Washington Federal.

Diversification Opportunities for Tectonic Financial and Washington Federal

-0.81

Correlation Coefficient

Tectonic Financial  Washington Federal

Pay attention - limited upside

The 3 months correlation between Tectonic and Washington is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Financial PR and Washington Federal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Federal and Tectonic Financial 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 Tectonic Financial PR are associated (or correlated) with Washington Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Federal has no effect on the direction of Tectonic Financial i.e., Tectonic Financial and Washington Federal go up and down completely randomly.

Pair Corralation between Tectonic Financial and Washington Federal

Assuming the 90 days horizon Tectonic Financial is expected to generate 1.52 times less return on investment than Washington Federal. But when comparing it to its historical volatility, Tectonic Financial PR is 2.11 times less risky than Washington Federal. It trades about 0.09 of its potential returns per unit of risk. Washington Federal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,328  in Washington Federal on September 30, 2024 and sell it today you would earn a total of  408.00  from holding Washington Federal or generate 30.72% return on investment over 90 days.

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

Tectonic Financial PR  vs.  Washington Federal

Tectonic Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Financial PR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tectonic Financial is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Washington Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Washington Federal has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Tectonic Financial and Washington Federal

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

The idea behind Tectonic Financial PR and Washington Federal 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.