Correlation Between Wilmington Trust and Snow Capital

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

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

Diversification Opportunities for Wilmington Trust and Snow Capital

0.98

Correlation Coefficient

Wilmington Trust  Snow Capital

Almost no diversification

The 3 months correlation between Wilmington and Snow is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Trust Retirement and Snow Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snow Capital Small and Wilmington Trust 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 Wilmington Trust Retirement are associated (or correlated) with Snow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snow Capital Small has no effect on the direction of Wilmington Trust i.e., Wilmington Trust and Snow Capital go up and down completely randomly.

Pair Corralation between Wilmington Trust and Snow Capital

Assuming the 90 days trading horizon Wilmington Trust Retirement is expected to under-perform the Snow Capital. But the fund apears to be less risky and, when comparing its historical volatility, Wilmington Trust Retirement is 1.12 times less risky than Snow Capital. The fund trades about -0.08 of its potential returns per unit of risk. The Snow Capital Small is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  5,911  in Snow Capital Small on December 21, 2024 and sell it today you would lose (261.00) from holding Snow Capital Small or give up 4.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Wilmington Trust Retirement  vs.  Snow Capital Small

Wilmington Trust Ret

Risk-Adjusted Performance

Very Weak

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

Snow Capital Small

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Wilmington Trust and Snow Capital

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

The idea behind Wilmington Trust Retirement and Snow Capital Small 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 CEOs Directory module to screen CEOs from public companies around the world.