Correlation Between Prime Dividend and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Prime Dividend 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 Prime Dividend and Wilmington Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Dividend Corp and Wilmington Capital Management, you can compare the effects of market volatilities on Prime Dividend 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 Prime Dividend with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Dividend and Wilmington Capital.
Diversification Opportunities for Prime Dividend and Wilmington Capital
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Prime and Wilmington is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Prime Dividend Corp and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and Prime Dividend 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 Prime Dividend Corp 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 Prime Dividend i.e., Prime Dividend and Wilmington Capital go up and down completely randomly.
Pair Corralation between Prime Dividend and Wilmington Capital
Assuming the 90 days trading horizon Prime Dividend Corp is expected to generate 0.3 times more return on investment than Wilmington Capital. However, Prime Dividend Corp is 3.3 times less risky than Wilmington Capital. It trades about 0.45 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.3 per unit of risk. If you would invest 805.00 in Prime Dividend Corp on September 12, 2024 and sell it today you would earn a total of 74.00 from holding Prime Dividend Corp or generate 9.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prime Dividend Corp vs. Wilmington Capital Management
Performance |
| Timeline |
| Prime Dividend Corp |
| Wilmington Capital |
Prime Dividend and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Dividend and Wilmington Capital
The main advantage of trading using opposite Prime Dividend and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Dividend 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.| Prime Dividend vs. Brompton Lifeco Split | Prime Dividend vs. North American Financial | Prime Dividend 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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