Correlation Between Wilmington Capital and Descartes Systems

Can any of the company-specific risk be diversified away by investing in both Wilmington Capital and Descartes Systems 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 Descartes Systems 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 Descartes Systems Group, you can compare the effects of market volatilities on Wilmington Capital and Descartes Systems 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 Descartes Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Capital and Descartes Systems.

Diversification Opportunities for Wilmington Capital and Descartes Systems

-0.27

Correlation Coefficient

Wilmington Capital  Descartes Systems

Very good diversification

The 3 months correlation between Wilmington and Descartes is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Descartes Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Descartes Systems 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 Descartes Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Descartes Systems has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Descartes Systems go up and down completely randomly.

Pair Corralation between Wilmington Capital and Descartes Systems

Assuming the 90 days trading horizon Wilmington Capital is expected to generate 1.54 times less return on investment than Descartes Systems. In addition to that, Wilmington Capital is 2.82 times more volatile than Descartes Systems Group. It trades about 0.02 of its total potential returns per unit of risk. Descartes Systems Group is currently generating about 0.09 per unit of volatility. If you would invest  9,506  in Descartes Systems Group on October 11, 2024 and sell it today you would earn a total of  6,779  from holding Descartes Systems Group or generate 71.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Wilmington Capital Management  vs.  Descartes Systems Group

Wilmington Capital

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic 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.

Descartes Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Descartes Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wilmington Capital and Descartes Systems

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

The idea behind Wilmington Capital Management and Descartes Systems Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.