Correlation Between Wilmington Capital and Xtract One

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

Diversification Opportunities for Wilmington Capital and Xtract One

0.72

Correlation Coefficient

Wilmington Capital  Xtract One

Poor diversification

The 3 months correlation between Wilmington and Xtract is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One Technologies 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 Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Xtract One go up and down completely randomly.

Pair Corralation between Wilmington Capital and Xtract One

Assuming the 90 days trading horizon Wilmington Capital Management is expected to generate 0.62 times more return on investment than Xtract One. However, Wilmington Capital Management is 1.61 times less risky than Xtract One. It trades about -0.06 of its potential returns per unit of risk. Xtract One Technologies is currently generating about -0.12 per unit of risk. If you would invest  260.00  in Wilmington Capital Management on September 24, 2024 and sell it today you would lose (29.00) from holding Wilmington Capital Management or give up 11.15% of portfolio value over 90 days.

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

Wilmington Capital Management  vs.  Xtract One Technologies

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 weak 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.

Xtract One Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtract One Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Wilmington Capital and Xtract One

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

The idea behind Wilmington Capital Management and Xtract One Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.