Correlation Between CI Financial and Wilmington Capital

Can any of the company-specific risk be diversified away by investing in both CI Financial and Wilmington Capital 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 CI Financial and Wilmington Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Financial Corp and Wilmington Capital Management, you can compare the effects of market volatilities on CI Financial and Wilmington Capital 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 CI Financial with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Financial and Wilmington Capital.

Diversification Opportunities for CI Financial and Wilmington Capital

-0.41

Correlation Coefficient

CI Financial  Wilmington Capital

Very good diversification

The 3 months correlation between CIX and Wilmington is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CI Financial Corp and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and CI Financial 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 CI Financial Corp are associated (or correlated) with Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of CI Financial i.e., CI Financial and Wilmington Capital go up and down completely randomly.

Pair Corralation between CI Financial and Wilmington Capital

Assuming the 90 days trading horizon CI Financial Corp is expected to generate 0.14 times more return on investment than Wilmington Capital. However, CI Financial Corp is 6.99 times less risky than Wilmington Capital. It trades about -0.02 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.3 per unit of risk. If you would invest  3,092  in CI Financial Corp on September 24, 2024 and sell it today you would lose (6.00) from holding CI Financial Corp or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CI Financial Corp  vs.  Wilmington Capital Management

CI Financial Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Financial Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CI Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CI Financial and Wilmington Capital

The main advantage of trading using opposite CI Financial and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Financial position performs unexpectedly, Wilmington Capital 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 Capital will offset losses from the drop in Wilmington Capital's long position.

The idea behind CI Financial Corp and Wilmington Capital Management 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.