Correlation Between Canadian General and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Canadian General 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 Canadian General and Wilmington Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Wilmington Capital Management, you can compare the effects of market volatilities on Canadian General 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 Canadian General with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Wilmington Capital.
Diversification Opportunities for Canadian General and Wilmington Capital
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canadian and Wilmington is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and Canadian General 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 Canadian General Investments 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 Canadian General i.e., Canadian General and Wilmington Capital go up and down completely randomly.
Pair Corralation between Canadian General and Wilmington Capital
Assuming the 90 days trading horizon Canadian General is expected to generate 2.27 times less return on investment than Wilmington Capital. But when comparing it to its historical volatility, Canadian General Investments is 4.14 times less risky than Wilmington Capital. It trades about 0.06 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 197.00 in Wilmington Capital Management on September 12, 2024 and sell it today you would earn a total of 33.00 from holding Wilmington Capital Management or generate 16.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Wilmington Capital Management
Performance |
| Timeline |
| Canadian General Inv |
| Wilmington Capital |
Canadian General and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Wilmington Capital
The main advantage of trading using opposite Canadian General and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General 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.| Canadian General vs. Brompton Lifeco Split | Canadian General vs. North American Financial | Canadian General vs. Prime Dividend Corp | Canadian General vs. Financial 15 Split |
| Wilmington Capital vs. Brompton Lifeco Split | Wilmington Capital vs. North American Financial | Wilmington Capital vs. Prime Dividend Corp | Wilmington Capital vs. Financial 15 Split |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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