Correlation Between Wilmington Diversified and Intech Managed

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

Diversification Opportunities for Wilmington Diversified and Intech Managed

0.8

Correlation Coefficient

Wilmington Diversified  Intech Managed

Very poor diversification

The 3 months correlation between Wilmington and Intech is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Diversified Income and Intech Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intech Managed Volatility 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 Intech Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intech Managed Volatility has no effect on the direction of Wilmington Diversified i.e., Wilmington Diversified and Intech Managed go up and down completely randomly.

Pair Corralation between Wilmington Diversified and Intech Managed

Assuming the 90 days horizon Wilmington Diversified Income is expected to under-perform the Intech Managed. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wilmington Diversified Income is 1.46 times less risky than Intech Managed. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Intech Managed Volatility is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,213  in Intech Managed Volatility on September 14, 2024 and sell it today you would lose (27.00) from holding Intech Managed Volatility or give up 2.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Wilmington Diversified Income  vs.  Intech Managed Volatility

Wilmington Diversified

Risk-Adjusted Performance

0 of 100

Insignificant

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.

Intech Managed Volatility

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intech Managed Volatility are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Intech Managed 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 Intech Managed

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

The idea behind Wilmington Diversified Income and Intech Managed Volatility 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.