Correlation Between DLH Holdings and Wilhelmina

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

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

Diversification Opportunities for DLH Holdings and Wilhelmina

0.57

Correlation Coefficient

DLH Holdings  Wilhelmina

Very weak diversification

The 3 months correlation between DLH and Wilhelmina is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding DLH Holdings Corp and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina and DLH Holdings 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 DLH Holdings Corp are associated (or correlated) with Wilhelmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilhelmina has no effect on the direction of DLH Holdings i.e., DLH Holdings and Wilhelmina go up and down completely randomly.

Pair Corralation between DLH Holdings and Wilhelmina

Given the investment horizon of 90 days DLH Holdings Corp is expected to under-perform the Wilhelmina. But the stock apears to be less risky and, when comparing its historical volatility, DLH Holdings Corp is 1.26 times less risky than Wilhelmina. The stock trades about -0.15 of its potential returns per unit of risk. The Wilhelmina is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Wilhelmina on September 18, 2024 and sell it today you would lose (106.00) from holding Wilhelmina or give up 20.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

DLH Holdings Corp  vs.  Wilhelmina

DLH Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DLH Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with DLH Holdings and Wilhelmina

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

The idea behind DLH Holdings Corp and Wilhelmina 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.