Correlation Between Capital Income and Wilmington Multi

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Can any of the company-specific risk be diversified away by investing in both Capital Income and Wilmington Multi 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 Capital Income and Wilmington Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Wilmington Multi Manager Real, you can compare the effects of market volatilities on Capital Income and Wilmington Multi 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 Capital Income with a short position of Wilmington Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Wilmington Multi.

Diversification Opportunities for Capital Income and Wilmington Multi

CapitalWilmingtonDiversified AwayCapitalWilmingtonDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Capital and Wilmington is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Wilmington Multi Manager Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Multi Man and Capital Income 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 Capital Income Builder are associated (or correlated) with Wilmington Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Multi Man has no effect on the direction of Capital Income i.e., Capital Income and Wilmington Multi go up and down completely randomly.

Pair Corralation between Capital Income and Wilmington Multi

Assuming the 90 days horizon Capital Income is expected to generate 1.11 times less return on investment than Wilmington Multi. But when comparing it to its historical volatility, Capital Income Builder is 1.11 times less risky than Wilmington Multi. It trades about 0.23 of its potential returns per unit of risk. Wilmington Multi Manager Real is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,424  in Wilmington Multi Manager Real on November 25, 2024 and sell it today you would earn a total of  31.00  from holding Wilmington Multi Manager Real or generate 2.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Capital Income Builder  vs.  Wilmington Multi Manager Real

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-2024
JavaScript chart by amCharts 3.21.15RIRFX WMRIX
       Timeline  
Capital Income Builder 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Capital Income Builder are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Capital Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb69707172
Wilmington Multi Man 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Multi Manager Real are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Wilmington Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb13.613.81414.214.414.6

Capital Income and Wilmington Multi Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.01-1.5-0.99-0.480.0086250.480.991.52.012.52 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15RIRFX WMRIX
       Returns  

Pair Trading with Capital Income and Wilmington Multi

The main advantage of trading using opposite Capital Income and Wilmington Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Wilmington Multi 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 Multi will offset losses from the drop in Wilmington Multi's long position.
The idea behind Capital Income Builder and Wilmington Multi Manager Real 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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