Correlation Between Plaza Retail and Wilmington Capital

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

By analyzing existing cross correlation between Plaza Retail REIT and Wilmington Capital Management, you can compare the effects of market volatilities on Plaza Retail and Wilmington Capital 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 Plaza Retail with a short position of Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plaza Retail and Wilmington Capital.

Diversification Opportunities for Plaza Retail and Wilmington Capital

-0.69

Correlation Coefficient

Plaza Retail  Wilmington Capital

Excellent diversification

The 3 months correlation between Plaza and Wilmington is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital and Plaza Retail 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 Plaza Retail REIT are associated (or correlated) with Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Plaza Retail i.e., Plaza Retail and Wilmington Capital go up and down completely randomly.

Pair Corralation between Plaza Retail and Wilmington Capital

Assuming the 90 days trading horizon Plaza Retail REIT is expected to under-perform the Wilmington Capital. But the stock apears to be less risky and, when comparing its historical volatility, Plaza Retail REIT is 2.7 times less risky than Wilmington Capital. The stock trades about 0.0 of its potential returns per unit of risk. The Wilmington Capital Management is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  283.00  in Wilmington Capital Management on August 30, 2024 and sell it today you would lose (2.00) from holding Wilmington Capital Management or give up 0.71% of portfolio value over 90 days.

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

Plaza Retail REIT  vs.  Wilmington Capital Management

Plaza Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Plaza Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Plaza Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 comparatively stable basic indicators, Wilmington Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Plaza Retail and Wilmington Capital

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

The idea behind Plaza Retail REIT and Wilmington Capital Management 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 Stocks Directory module to find actively traded stocks across global markets.