Correlation Between WisdomTree Investments and PT Bumi
Can any of the company-specific risk be diversified away by investing in both WisdomTree Investments and PT Bumi 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 PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Investments and PT Bumi Resources, you can compare the effects of market volatilities on WisdomTree Investments and PT Bumi 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 PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and PT Bumi.
Diversification Opportunities for WisdomTree Investments and PT Bumi
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and PJM is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources 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 PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and PT Bumi go up and down completely randomly.
Pair Corralation between WisdomTree Investments and PT Bumi
Assuming the 90 days horizon WisdomTree Investments is expected to generate 0.36 times more return on investment than PT Bumi. However, WisdomTree Investments is 2.77 times less risky than PT Bumi. It trades about 0.08 of its potential returns per unit of risk. PT Bumi Resources is currently generating about 0.03 per unit of risk. If you would invest 644.00 in WisdomTree Investments on September 12, 2024 and sell it today you would earn a total of 424.00 from holding WisdomTree Investments or generate 65.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Investments vs. PT Bumi Resources
Performance |
| Timeline |
| WisdomTree Investments |
| PT Bumi Resources |
WisdomTree Investments and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Investments and PT Bumi
The main advantage of trading using opposite WisdomTree Investments and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Investments position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi'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 |
| PT Bumi vs. Automatic Data Processing | PT Bumi vs. Data3 Limited | PT Bumi vs. WisdomTree Investments | PT Bumi vs. MGIC INVESTMENT |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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