Correlation Between Wilmington International and Wilmington Multi-manager
Can any of the company-specific risk be diversified away by investing in both Wilmington International and Wilmington Multi-manager 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 International and Wilmington Multi-manager into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington International Fund and Wilmington Multi Manager Real, you can compare the effects of market volatilities on Wilmington International and Wilmington Multi-manager 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 International with a short position of Wilmington Multi-manager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington International and Wilmington Multi-manager.
Diversification Opportunities for Wilmington International and Wilmington Multi-manager
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wilmington and Wilmington is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington International Fund and Wilmington Multi Manager Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Multi-manager and Wilmington International 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 International Fund are associated (or correlated) with Wilmington Multi-manager. 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-manager has no effect on the direction of Wilmington International i.e., Wilmington International and Wilmington Multi-manager go up and down completely randomly.
Pair Corralation between Wilmington International and Wilmington Multi-manager
Assuming the 90 days horizon Wilmington International is expected to generate 1.35 times less return on investment than Wilmington Multi-manager. In addition to that, Wilmington International is 1.92 times more volatile than Wilmington Multi Manager Real. It trades about 0.19 of its total potential returns per unit of risk. Wilmington Multi Manager Real is currently generating about 0.5 per unit of volatility. If you would invest 1,376 in Wilmington Multi Manager Real on November 9, 2024 and sell it today you would earn a total of 65.00 from holding Wilmington Multi Manager Real or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington International Fund vs. Wilmington Multi Manager Real
Performance |
| Timeline |
| Wilmington International |
| Wilmington Multi-manager |
Wilmington International and Wilmington Multi-manager Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington International and Wilmington Multi-manager
The main advantage of trading using opposite Wilmington International and Wilmington Multi-manager positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington International position performs unexpectedly, Wilmington Multi-manager 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-manager will offset losses from the drop in Wilmington Multi-manager's long position.The idea behind Wilmington International Fund 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.
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |