Correlation Between WisdomTree Natural and UBS ETF
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and UBS ETF 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 Natural and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Natural Gas and UBS ETF plc, you can compare the effects of market volatilities on WisdomTree Natural and UBS ETF 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 Natural with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and UBS ETF.
Diversification Opportunities for WisdomTree Natural and UBS ETF
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and UBS is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and UBS ETF plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF plc and WisdomTree Natural 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 Natural Gas are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF plc has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and UBS ETF go up and down completely randomly.
Pair Corralation between WisdomTree Natural and UBS ETF
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the UBS ETF. In addition to that, WisdomTree Natural is 16.06 times more volatile than UBS ETF plc. It trades about -0.24 of its total potential returns per unit of risk. UBS ETF plc is currently generating about -0.13 per unit of volatility. If you would invest 255,200 in UBS ETF plc on November 28, 2024 and sell it today you would lose (5,400) from holding UBS ETF plc or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. UBS ETF plc
Performance |
| Timeline |
| WisdomTree Natural Gas |
| UBS ETF plc |
WisdomTree Natural and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and UBS ETF
The main advantage of trading using opposite WisdomTree Natural and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.| WisdomTree Natural vs. WisdomTree Zinc | WisdomTree Natural vs. WisdomTree Brent Crude | WisdomTree Natural vs. WisdomTree Aluminium 2x | WisdomTree Natural vs. WisdomTree Enhanced Commodity |
| UBS ETF vs. UBS ETF | UBS ETF vs. UBS ETF plc | UBS ETF vs. UBS Fund Solutions | UBS ETF vs. UBS Barclays Liquid |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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