Correlation Between Wilmington Capital and Pfizer

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

Diversification Opportunities for Wilmington Capital and Pfizer

0.01

Correlation Coefficient

Wilmington Capital  Pfizer

Significant diversification

The 3 months correlation between Wilmington and Pfizer is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc CDR 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc CDR has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Pfizer go up and down completely randomly.

Pair Corralation between Wilmington Capital and Pfizer

Assuming the 90 days trading horizon Wilmington Capital Management is expected to generate 2.57 times more return on investment than Pfizer. However, Wilmington Capital is 2.57 times more volatile than Pfizer Inc CDR. It trades about 0.02 of its potential returns per unit of risk. Pfizer Inc CDR is currently generating about -0.06 per unit of risk. If you would invest  226.00  in Wilmington Capital Management on October 3, 2024 and sell it today you would earn a total of  5.00  from holding Wilmington Capital Management or generate 2.21% return on investment over 90 days.

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

Wilmington Capital Management  vs.  Pfizer Inc CDR

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.

Pfizer Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Pfizer is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Capital and Pfizer

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

The idea behind Wilmington Capital Management and Pfizer Inc CDR 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.