Correlation Between WisdomTree Natural and JPM BetaBuilders
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and JPM BetaBuilders 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 JPM BetaBuilders 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 JPM BetaBuilders UK, you can compare the effects of market volatilities on WisdomTree Natural and JPM BetaBuilders 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 JPM BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and JPM BetaBuilders.
Diversification Opportunities for WisdomTree Natural and JPM BetaBuilders
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and JPM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and JPM BetaBuilders UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders 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 JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and JPM BetaBuilders go up and down completely randomly.
Pair Corralation between WisdomTree Natural and JPM BetaBuilders
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 53.15 times more return on investment than JPM BetaBuilders. However, WisdomTree Natural is 53.15 times more volatile than JPM BetaBuilders UK. It trades about 0.05 of its potential returns per unit of risk. JPM BetaBuilders UK is currently generating about 0.06 per unit of risk. If you would invest 2,574,900 in WisdomTree Natural Gas on September 3, 2024 and sell it today you would lose (1,968,050) from holding WisdomTree Natural Gas or give up 76.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. JPM BetaBuilders UK
Performance |
| Timeline |
| WisdomTree Natural Gas |
| JPM BetaBuilders |
WisdomTree Natural and JPM BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and JPM BetaBuilders
The main advantage of trading using opposite WisdomTree Natural and JPM BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, JPM BetaBuilders 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 JPM BetaBuilders will offset losses from the drop in JPM BetaBuilders' long position.| WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 2x | WisdomTree Natural vs. WisdomTree Silver 3x |
| JPM BetaBuilders vs. Leverage Shares 3x | JPM BetaBuilders vs. WisdomTree Natural Gas | JPM BetaBuilders vs. SP 500 VIX | JPM BetaBuilders vs. Leverage Shares 3x |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |