Correlation Between Wilmington Capital and Arbor Metals

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

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

Diversification Opportunities for Wilmington Capital and Arbor Metals

0.26

Correlation Coefficient

Wilmington Capital  Arbor Metals

Modest diversification

The 3 months correlation between Wilmington and Arbor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and Wilmington Capital 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 Capital Management are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Arbor Metals go up and down completely randomly.

Pair Corralation between Wilmington Capital and Arbor Metals

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the Arbor Metals. But the stock apears to be less risky and, when comparing its historical volatility, Wilmington Capital Management is 11.04 times less risky than Arbor Metals. The stock trades about -0.1 of its potential returns per unit of risk. The Arbor Metals Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Arbor Metals Corp on December 25, 2024 and sell it today you would earn a total of  12.00  from holding Arbor Metals Corp or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Wilmington Capital Management  vs.  Arbor Metals Corp

Wilmington Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Arbor Metals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmington Capital and Arbor Metals

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

The idea behind Wilmington Capital Management and Arbor Metals Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.