Correlation Between Wilmington Capital and South Pacific

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

Diversification Opportunities for Wilmington Capital and South Pacific

0.37

Correlation Coefficient

Wilmington Capital  South Pacific

Weak diversification

The 3 months correlation between Wilmington and South is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals 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 South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and South Pacific go up and down completely randomly.

Pair Corralation between Wilmington Capital and South Pacific

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the South Pacific. But the stock apears to be less risky and, when comparing its historical volatility, Wilmington Capital Management is 4.19 times less risky than South Pacific. The stock trades about -0.01 of its potential returns per unit of risk. The South Pacific Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  41.00  in South Pacific Metals on April 25, 2025 and sell it today you would earn a total of  13.00  from holding South Pacific Metals or generate 31.71% return on investment over 90 days.

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

Wilmington Capital Management  vs.  South Pacific Metals

Wilmington Capital

Risk-Adjusted Performance

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

South Pacific Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in South Pacific Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, South Pacific showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wilmington Capital and South Pacific

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

The idea behind Wilmington Capital Management and South Pacific Metals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.