Correlation Between Caribbean Utilities and Wilmington Capital

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

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

Diversification Opportunities for Caribbean Utilities and Wilmington Capital

-0.76

Correlation Coefficient

Caribbean Utilities  Wilmington Capital

Pay attention - limited upside

The 3 months correlation between Caribbean and Wilmington is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities i.e., Caribbean Utilities and Wilmington Capital go up and down completely randomly.

Pair Corralation between Caribbean Utilities and Wilmington Capital

Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 0.37 times more return on investment than Wilmington Capital. However, Caribbean Utilities is 2.68 times less risky than Wilmington Capital. It trades about 0.0 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.07 per unit of risk. If you would invest  1,399  in Caribbean Utilities on October 1, 2024 and sell it today you would lose (1.00) from holding Caribbean Utilities or give up 0.07% of portfolio value over 90 days.

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

Caribbean Utilities  vs.  Wilmington Capital Management

Caribbean Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribbean Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caribbean Utilities is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 Caribbean Utilities and Wilmington Capital

The main advantage of trading using opposite Caribbean Utilities and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities 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 Caribbean Utilities 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.