Correlation Between Wilhelmina and Maximus
Can any of the company-specific risk be diversified away by investing in both Wilhelmina and Maximus 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 Wilhelmina and Maximus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilhelmina and Maximus, you can compare the effects of market volatilities on Wilhelmina and Maximus 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 Wilhelmina with a short position of Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilhelmina and Maximus.
Diversification Opportunities for Wilhelmina and Maximus
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wilhelmina and Maximus is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Wilhelmina 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 Wilhelmina are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Wilhelmina i.e., Wilhelmina and Maximus go up and down completely randomly.
Pair Corralation between Wilhelmina and Maximus
Given the investment horizon of 90 days Wilhelmina is expected to under-perform the Maximus. In addition to that, Wilhelmina is 3.03 times more volatile than Maximus. It trades about -0.08 of its total potential returns per unit of risk. Maximus is currently generating about -0.2 per unit of volatility. If you would invest 9,208 in Maximus on August 28, 2024 and sell it today you would lose (1,862) from holding Maximus or give up 20.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilhelmina vs. Maximus
Performance |
| Timeline |
| Wilhelmina |
| Maximus |
Wilhelmina and Maximus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilhelmina and Maximus
The main advantage of trading using opposite Wilhelmina and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilhelmina position performs unexpectedly, Maximus 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 Maximus will offset losses from the drop in Maximus' long position.| Wilhelmina vs. Park Electrochemical | Wilhelmina vs. Innovative Solutions and | Wilhelmina vs. Curtiss Wright | Wilhelmina vs. National Presto Industries |
| Maximus vs. Oneconnect Financial Technology | Maximus vs. Global Business Travel | Maximus vs. Alight Inc | Maximus vs. CS Disco LLC |
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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