Correlation Between Wilmington Trust and Federated Total

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

Diversification Opportunities for Wilmington Trust and Federated Total

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Wilmington and Federated is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Trust Retirement and Federated Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Total Return and Wilmington Trust 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 Wilmington Trust Retirement are associated (or correlated) with Federated Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Total Return has no effect on the direction of Wilmington Trust i.e., Wilmington Trust and Federated Total go up and down completely randomly.

Pair Corralation between Wilmington Trust and Federated Total

Assuming the 90 days trading horizon Wilmington Trust is expected to generate 1.19 times less return on investment than Federated Total. In addition to that, Wilmington Trust is 3.12 times more volatile than Federated Total Return. It trades about 0.05 of its total potential returns per unit of risk. Federated Total Return is currently generating about 0.18 per unit of volatility. If you would invest  934.00  in Federated Total Return on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Federated Total Return or generate 0.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Wilmington Trust Retirement  vs.  Federated Total Return

 Performance 
       Timeline  
Wilmington Trust Ret 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Wilmington Trust Retirement are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Wilmington Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Federated Total Return 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Federated Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wilmington Trust and Federated Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wilmington Trust and Federated Total

The main advantage of trading using opposite Wilmington Trust and Federated Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Trust position performs unexpectedly, Federated Total 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 Federated Total will offset losses from the drop in Federated Total's long position.
The idea behind Wilmington Trust Retirement and Federated Total Return 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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