Correlation Between WisdomTree Investments and Apple
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and Apple 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 WisdomTree Investments and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and Apple Inc, you can compare the effects of market volatilities on WisdomTree Investments and Apple 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 WisdomTree Investments with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and Apple.
Diversification Opportunities for WisdomTree Investments and Apple
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and Apple is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and WisdomTree Investments 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 WisdomTree Investments are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and Apple go up and down completely randomly.
Pair Corralation between WisdomTree Investments and Apple
Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.54 times more return on investment than Apple. However, WisdomTree Investments is 1.54 times more volatile than Apple Inc. It trades about 0.07 of its potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of risk. If you would invest 499.00 in WisdomTree Investments on October 14, 2024 and sell it today you would earn a total of 423.00 from holding WisdomTree Investments or generate 84.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. Apple Inc
Performance |
| Timeline |
| WisdomTree Investments |
| Apple Inc |
WisdomTree Investments and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and Apple
The main advantage of trading using opposite WisdomTree Investments and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind WisdomTree Investments and Apple Inc 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.
| Apple vs. FIREWEED METALS P | Apple vs. HK Electric Investments | Apple vs. WisdomTree Investments | Apple vs. GREENX METALS LTD |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |