Correlation Between Wilmington Capital and Martinrea International

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

Diversification Opportunities for Wilmington Capital and Martinrea International

-0.4

Correlation Coefficient

Wilmington Capital  Martinrea International

Very good diversification

The 3 months correlation between Wilmington and Martinrea is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Martinrea International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martinrea International 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 Martinrea International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martinrea International has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Martinrea International go up and down completely randomly.

Pair Corralation between Wilmington Capital and Martinrea International

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the Martinrea International. In addition to that, Wilmington Capital is 1.12 times more volatile than Martinrea International. It trades about -0.07 of its total potential returns per unit of risk. Martinrea International is currently generating about -0.06 per unit of volatility. If you would invest  1,137  in Martinrea International on September 4, 2024 and sell it today you would lose (108.00) from holding Martinrea International or give up 9.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Wilmington Capital Management  vs.  Martinrea International

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 latest unfluctuating 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.

Martinrea International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martinrea International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Wilmington Capital and Martinrea International

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

The idea behind Wilmington Capital Management and Martinrea International 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.