Correlation Between WisdomTree Brent and WisdomTree Energy
Can any of the company-specific risk be diversified away by investing in both WisdomTree Brent and WisdomTree Energy 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 Brent and WisdomTree Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Brent Crude and WisdomTree Energy Longer, you can compare the effects of market volatilities on WisdomTree Brent and WisdomTree Energy 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 Brent with a short position of WisdomTree Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Brent and WisdomTree Energy.
Diversification Opportunities for WisdomTree Brent and WisdomTree Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Brent Crude and WisdomTree Energy Longer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Energy Longer and WisdomTree Brent 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 Brent Crude are associated (or correlated) with WisdomTree Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Energy Longer has no effect on the direction of WisdomTree Brent i.e., WisdomTree Brent and WisdomTree Energy go up and down completely randomly.
Pair Corralation between WisdomTree Brent and WisdomTree Energy
Assuming the 90 days trading horizon WisdomTree Brent Crude is expected to generate 3.57 times more return on investment than WisdomTree Energy. However, WisdomTree Brent is 3.57 times more volatile than WisdomTree Energy Longer. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Energy Longer is currently generating about 0.01 per unit of risk. If you would invest 1,929 in WisdomTree Brent Crude on October 30, 2025 and sell it today you would earn a total of 125.00 from holding WisdomTree Brent Crude or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
WisdomTree Brent Crude vs. WisdomTree Energy Longer
Performance |
| Timeline |
| WisdomTree Brent Crude |
| WisdomTree Energy Longer |
WisdomTree Brent and WisdomTree Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Brent and WisdomTree Energy
The main advantage of trading using opposite WisdomTree Brent and WisdomTree Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Brent position performs unexpectedly, WisdomTree Energy 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 WisdomTree Energy will offset losses from the drop in WisdomTree Energy's long position.| WisdomTree Brent vs. WisdomTree Zinc | WisdomTree Brent vs. WisdomTree Aluminium 2x | WisdomTree Brent vs. WisdomTree Enhanced Commodity | WisdomTree Brent vs. WisdomTree Gold 3x |
| WisdomTree Energy vs. WisdomTree Zinc | WisdomTree Energy vs. WisdomTree Brent Crude | WisdomTree Energy vs. WisdomTree Aluminium 2x | WisdomTree Energy vs. WisdomTree Enhanced Commodity |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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