Correlation Between WisdomTree Gold and WisdomTree WTI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Gold and WisdomTree WTI 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 Gold and WisdomTree WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Gold 3x and WisdomTree WTI Crude, you can compare the effects of market volatilities on WisdomTree Gold and WisdomTree WTI 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 Gold with a short position of WisdomTree WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Gold and WisdomTree WTI.
Diversification Opportunities for WisdomTree Gold and WisdomTree WTI
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and WisdomTree is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Gold 3x and WisdomTree WTI Crude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree WTI Crude and WisdomTree Gold 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 Gold 3x are associated (or correlated) with WisdomTree WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree WTI Crude has no effect on the direction of WisdomTree Gold i.e., WisdomTree Gold and WisdomTree WTI go up and down completely randomly.
Pair Corralation between WisdomTree Gold and WisdomTree WTI
Assuming the 90 days trading horizon WisdomTree Gold 3x is expected to under-perform the WisdomTree WTI. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Gold 3x is 1.25 times less risky than WisdomTree WTI. The etf trades about -0.09 of its potential returns per unit of risk. The WisdomTree WTI Crude is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,138 in WisdomTree WTI Crude on September 2, 2024 and sell it today you would lose (65.00) from holding WisdomTree WTI Crude or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Gold 3x vs. WisdomTree WTI Crude
Performance |
| Timeline |
| WisdomTree Gold 3x |
| WisdomTree WTI Crude |
WisdomTree Gold and WisdomTree WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Gold and WisdomTree WTI
The main advantage of trading using opposite WisdomTree Gold and WisdomTree WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Gold position performs unexpectedly, WisdomTree WTI 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 WTI will offset losses from the drop in WisdomTree WTI's long position.| WisdomTree Gold vs. GraniteShares 3x Short | WisdomTree Gold vs. WisdomTree Natural Gas | WisdomTree Gold vs. Leverage Shares 3x | WisdomTree Gold vs. WisdomTree SP 500 |
| WisdomTree WTI vs. GraniteShares 3x Short | WisdomTree WTI vs. WisdomTree Natural Gas | WisdomTree WTI vs. Leverage Shares 3x | WisdomTree WTI vs. WisdomTree SP 500 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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