Correlation Between Wilmington Capital and Computer Modelling

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

Diversification Opportunities for Wilmington Capital and Computer Modelling

-0.26

Correlation Coefficient

Wilmington Capital  Computer Modelling

Very good diversification

The 3 months correlation between Wilmington and Computer is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and Computer Modelling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Modelling 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 Computer Modelling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Modelling has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and Computer Modelling go up and down completely randomly.

Pair Corralation between Wilmington Capital and Computer Modelling

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the Computer Modelling. But the stock apears to be less risky and, when comparing its historical volatility, Wilmington Capital Management is 1.07 times less risky than Computer Modelling. The stock trades about -0.07 of its potential returns per unit of risk. The Computer Modelling Group is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,208  in Computer Modelling Group on September 4, 2024 and sell it today you would lose (94.00) from holding Computer Modelling Group or give up 7.78% of portfolio value over 90 days.

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

Wilmington Capital Management  vs.  Computer Modelling Group

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.

Computer Modelling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Modelling Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Computer Modelling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Capital and Computer Modelling

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

The idea behind Wilmington Capital Management and Computer Modelling Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.