Correlation Between WisdomTree Investments and China Railway
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and China Railway 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 China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and China Railway Group, you can compare the effects of market volatilities on WisdomTree Investments and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and China Railway.
Diversification Opportunities for WisdomTree Investments and China Railway
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WisdomTree and China is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and China Railway go up and down completely randomly.
Pair Corralation between WisdomTree Investments and China Railway
Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.71 times less return on investment than China Railway. But when comparing it to its historical volatility, WisdomTree Investments is 2.56 times less risky than China Railway. It trades about 0.12 of its potential returns per unit of risk. China Railway Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 20.00 in China Railway Group on September 12, 2024 and sell it today you would earn a total of 26.00 from holding China Railway Group or generate 130.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. China Railway Group
Performance |
| Timeline |
| WisdomTree Investments |
| China Railway Group |
WisdomTree Investments and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and China Railway
The main advantage of trading using opposite WisdomTree Investments and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| WisdomTree Investments vs. Ameriprise Financial | WisdomTree Investments vs. Ares Management Corp | WisdomTree Investments vs. Superior Plus Corp | WisdomTree Investments vs. SIVERS SEMICONDUCTORS AB |
| China Railway vs. YATRA ONLINE DL 0001 | China Railway vs. REINET INVESTMENTS SCA | China Railway vs. CODERE ONLINE LUX | China Railway vs. WisdomTree Investments |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |