Correlation Between Wilhelmina and Mader Group

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

By analyzing existing cross correlation between Wilhelmina and Mader Group Limited, you can compare the effects of market volatilities on Wilhelmina and Mader Group 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 Wilhelmina with a short position of Mader Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilhelmina and Mader Group.

Diversification Opportunities for Wilhelmina and Mader Group

0.39

Correlation Coefficient

Wilhelmina  Mader Group

Weak diversification

The 3 months correlation between Wilhelmina and Mader is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and Wilhelmina 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 Wilhelmina are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Wilhelmina i.e., Wilhelmina and Mader Group go up and down completely randomly.

Pair Corralation between Wilhelmina and Mader Group

Given the investment horizon of 90 days Wilhelmina is expected to under-perform the Mader Group. In addition to that, Wilhelmina is 2.55 times more volatile than Mader Group Limited. It trades about -0.02 of its total potential returns per unit of risk. Mader Group Limited is currently generating about -0.02 per unit of volatility. If you would invest  388.00  in Mader Group Limited on August 25, 2024 and sell it today you would lose (31.00) from holding Mader Group Limited or give up 7.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Wilhelmina  vs.  Mader Group Limited

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wilhelmina and Mader Group

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

The idea behind Wilhelmina and Mader Group Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.