Correlation Between Wilmington Diversified and Wstcm Credit

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

By analyzing existing cross correlation between Wilmington Diversified Income and Wstcm Credit Select, you can compare the effects of market volatilities on Wilmington Diversified and Wstcm Credit 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 Diversified with a short position of Wstcm Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Diversified and Wstcm Credit.

Diversification Opportunities for Wilmington Diversified and Wstcm Credit

-0.63

Correlation Coefficient

Wilmington Diversified  Wstcm Credit

Excellent diversification

The 3 months correlation between Wilmington and Wstcm is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Diversified Income and Wstcm Credit Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wstcm Credit Select and Wilmington Diversified 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 Diversified Income are associated (or correlated) with Wstcm Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wstcm Credit Select has no effect on the direction of Wilmington Diversified i.e., Wilmington Diversified and Wstcm Credit go up and down completely randomly.

Pair Corralation between Wilmington Diversified and Wstcm Credit

If you would invest  1,324  in Wilmington Diversified Income on October 24, 2024 and sell it today you would earn a total of  56.00  from holding Wilmington Diversified Income or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.56%
Values	Daily Returns

Wilmington Diversified Income  vs.  Wstcm Credit Select

Wilmington Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wilmington Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wstcm Credit Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wstcm Credit Select has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Wstcm Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Diversified and Wstcm Credit

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

The idea behind Wilmington Diversified Income and Wstcm Credit Select 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.