Correlation Between First Mining and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both First Mining 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 First Mining and Wilmington Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Mining Gold and Wilmington Capital Management, you can compare the effects of market volatilities on First Mining 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 First Mining with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Mining and Wilmington Capital.
Diversification Opportunities for First Mining and Wilmington Capital
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Wilmington is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Mining Gold and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and First Mining 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 First Mining Gold 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 First Mining i.e., First Mining and Wilmington Capital go up and down completely randomly.
Pair Corralation between First Mining and Wilmington Capital
Assuming the 90 days horizon First Mining Gold is expected to generate 6.27 times more return on investment than Wilmington Capital. However, First Mining is 6.27 times more volatile than Wilmington Capital Management. It trades about 0.14 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.09 per unit of risk. If you would invest 3.77 in First Mining Gold on November 2, 2024 and sell it today you would earn a total of 9.23 from holding First Mining Gold or generate 244.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Mining Gold vs. Wilmington Capital Management
Performance |
| Timeline |
| First Mining Gold |
| Wilmington Capital |
First Mining and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Mining and Wilmington Capital
The main advantage of trading using opposite First Mining and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Mining 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.The idea behind First Mining Gold and Wilmington Capital Management 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.| Wilmington Capital vs. High Liner Foods | Wilmington Capital vs. Labrador Iron Ore | Wilmington Capital vs. Western Copper and | Wilmington Capital vs. Magna Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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