Correlation Between Bombardier and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Bombardier and Wilmington Capital 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 Bombardier and Wilmington Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bombardier and Wilmington Capital Management, you can compare the effects of market volatilities on Bombardier and Wilmington Capital 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 Bombardier with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bombardier and Wilmington Capital.
Diversification Opportunities for Bombardier and Wilmington Capital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bombardier and Wilmington is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bombardier and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and Bombardier 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 Bombardier are associated (or correlated) with Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Bombardier i.e., Bombardier and Wilmington Capital go up and down completely randomly.
Pair Corralation between Bombardier and Wilmington Capital
Assuming the 90 days trading horizon Bombardier is expected to generate 0.77 times more return on investment than Wilmington Capital. However, Bombardier is 1.3 times less risky than Wilmington Capital. It trades about 0.05 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.04 per unit of risk. If you would invest 5,458 in Bombardier on September 4, 2024 and sell it today you would earn a total of 4,268 from holding Bombardier or generate 78.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bombardier vs. Wilmington Capital Management
Performance |
| Timeline |
| Bombardier |
| Wilmington Capital |
Bombardier and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bombardier and Wilmington Capital
The main advantage of trading using opposite Bombardier and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bombardier position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital's long position.| Bombardier vs. BlackBerry | Bombardier vs. Air Canada | Bombardier vs. Suncor Energy | Bombardier vs. Manulife Financial Corp |
| Wilmington Capital vs. Queens Road Capital | Wilmington Capital vs. Westshore Terminals Investment | Wilmington Capital vs. Canadian General Investments | Wilmington Capital vs. 2028 Investment Grade |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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