Correlation Between Spire Global and Wilmington Funds

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

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

Diversification Opportunities for Spire Global and Wilmington Funds

0.16

Correlation Coefficient

Spire Global  Wilmington Funds

Average diversification

The 3 months correlation between Spire and Wilmington is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Wilmington Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Funds and Spire Global 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 Spire Global are associated (or correlated) with Wilmington Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Funds has no effect on the direction of Spire Global i.e., Spire Global and Wilmington Funds go up and down completely randomly.

Pair Corralation between Spire Global and Wilmington Funds

Given the investment horizon of 90 days Spire Global is expected to generate 2.66 times less return on investment than Wilmington Funds. But when comparing it to its historical volatility, Spire Global is 3.15 times less risky than Wilmington Funds. It trades about 0.04 of its potential returns per unit of risk. Wilmington Funds is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Wilmington Funds on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Wilmington Funds or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Spire Global  vs.  Wilmington Funds

Spire Global

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

Wilmington Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wilmington Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spire Global and Wilmington Funds

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

The idea behind Spire Global and Wilmington Funds 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.