Correlation Between Marchex and Wilhelmina

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

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

Diversification Opportunities for Marchex and Wilhelmina

0.37

Correlation Coefficient

Marchex  Wilhelmina

Weak diversification

The 3 months correlation between Marchex and Wilhelmina is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina and Marchex 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 Marchex 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 Marchex i.e., Marchex and Wilhelmina go up and down completely randomly.

Pair Corralation between Marchex and Wilhelmina

Given the investment horizon of 90 days Marchex is expected to generate 0.83 times more return on investment than Wilhelmina. However, Marchex is 1.21 times less risky than Wilhelmina. It trades about 0.01 of its potential returns per unit of risk. Wilhelmina is currently generating about 0.01 per unit of risk. If you would invest  205.00  in Marchex on October 22, 2024 and sell it today you would lose (13.00) from holding Marchex or give up 6.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.17%
Values	Daily Returns

Marchex  vs.  Wilhelmina

Marchex

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wilhelmina

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilhelmina are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Wilhelmina may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marchex and Wilhelmina

The main advantage of trading using opposite Marchex and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marchex 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 Marchex 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.

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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.