Correlation Between Maximus and Wilhelmina

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

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

Diversification Opportunities for Maximus and Wilhelmina

-0.22

Correlation Coefficient

Maximus  Wilhelmina

Very good diversification

The 3 months correlation between Maximus and Wilhelmina is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Wilhelmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilhelmina and Maximus 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 Maximus 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 Maximus i.e., Maximus and Wilhelmina go up and down completely randomly.

Pair Corralation between Maximus and Wilhelmina

Considering the 90-day investment horizon Maximus is expected to under-perform the Wilhelmina. But the stock apears to be less risky and, when comparing its historical volatility, Maximus is 2.45 times less risky than Wilhelmina. The stock trades about -0.16 of its potential returns per unit of risk. The Wilhelmina is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  395.00  in Wilhelmina on October 5, 2024 and sell it today you would lose (44.00) from holding Wilhelmina or give up 11.14% of portfolio value over 90 days.

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

Maximus  vs.  Wilhelmina

Maximus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maximus 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 primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 very healthy essential indicators, Wilhelmina is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Maximus and Wilhelmina

The main advantage of trading using opposite Maximus and Wilhelmina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maximus 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 Maximus 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.