Correlation Between Wilmington Global and Wilmington Broad
Can any of the company-specific risk be diversified away by investing in both Wilmington Global and Wilmington Broad 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 Global and Wilmington Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington Global Alpha and Wilmington Broad Market, you can compare the effects of market volatilities on Wilmington Global and Wilmington Broad 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 Global with a short position of Wilmington Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Global and Wilmington Broad.
Diversification Opportunities for Wilmington Global and Wilmington Broad
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wilmington and Wilmington is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Global Alpha and Wilmington Broad Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Broad Market and Wilmington Global 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 Global Alpha are associated (or correlated) with Wilmington Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Broad Market has no effect on the direction of Wilmington Global i.e., Wilmington Global and Wilmington Broad go up and down completely randomly.
Pair Corralation between Wilmington Global and Wilmington Broad
Assuming the 90 days horizon Wilmington Global Alpha is expected to generate 0.77 times more return on investment than Wilmington Broad. However, Wilmington Global Alpha is 1.3 times less risky than Wilmington Broad. It trades about 0.13 of its potential returns per unit of risk. Wilmington Broad Market is currently generating about 0.03 per unit of risk. If you would invest 1,180 in Wilmington Global Alpha on August 29, 2024 and sell it today you would earn a total of 184.00 from holding Wilmington Global Alpha or generate 15.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington Global Alpha vs. Wilmington Broad Market
Performance |
| Timeline |
| Wilmington Global Alpha |
| Wilmington Broad Market |
Wilmington Global and Wilmington Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington Global and Wilmington Broad
The main advantage of trading using opposite Wilmington Global and Wilmington Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Global position performs unexpectedly, Wilmington Broad 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 Broad will offset losses from the drop in Wilmington Broad's long position.| Wilmington Global vs. Wilmington Broad Market | Wilmington Global vs. Wilmington Municipal Bond | Wilmington Global vs. Wilmington Municipal Bond | Wilmington Global vs. Wilmington Diversified Income |
| Wilmington Broad vs. Wilmington Global Alpha | Wilmington Broad vs. Wilmington Global Alpha | Wilmington Broad vs. Wilmington Municipal Bond | Wilmington Broad 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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