Correlation Between Wilmington Broad and Wilmington Municipal
Can any of the company-specific risk be diversified away by investing in both Wilmington Broad and Wilmington Municipal 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 Broad and Wilmington Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington Broad Market and Wilmington Municipal Bond, you can compare the effects of market volatilities on Wilmington Broad and Wilmington Municipal 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 Broad with a short position of Wilmington Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Broad and Wilmington Municipal.
Diversification Opportunities for Wilmington Broad and Wilmington Municipal
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wilmington and Wilmington is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Broad Market and Wilmington Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Municipal Bond and Wilmington Broad 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 Broad Market are associated (or correlated) with Wilmington Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Municipal Bond has no effect on the direction of Wilmington Broad i.e., Wilmington Broad and Wilmington Municipal go up and down completely randomly.
Pair Corralation between Wilmington Broad and Wilmington Municipal
Assuming the 90 days horizon Wilmington Broad Market is expected to generate 1.94 times more return on investment than Wilmington Municipal. However, Wilmington Broad is 1.94 times more volatile than Wilmington Municipal Bond. It trades about 0.1 of its potential returns per unit of risk. Wilmington Municipal Bond is currently generating about 0.16 per unit of risk. If you would invest 791.00 in Wilmington Broad Market on August 26, 2024 and sell it today you would earn a total of 76.00 from holding Wilmington Broad Market or generate 9.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington Broad Market vs. Wilmington Municipal Bond
Performance |
| Timeline |
| Wilmington Broad Market |
| Wilmington Municipal Bond |
Wilmington Broad and Wilmington Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington Broad and Wilmington Municipal
The main advantage of trading using opposite Wilmington Broad and Wilmington Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Broad position performs unexpectedly, Wilmington Municipal 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 Municipal will offset losses from the drop in Wilmington Municipal's long position.| Wilmington Broad vs. Doubleline Emerging Markets | Wilmington Broad vs. Aqr Long Short Equity | Wilmington Broad vs. Siit Emerging Markets | Wilmington Broad vs. Aqr Equity Market |
| Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Global Alpha | Wilmington Municipal vs. Wilmington Broad Market | Wilmington Municipal vs. Wilmington Municipal Bond |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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