Correlation Between WisdomTree Natural and Multi Units
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and Multi Units 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 Multi Units 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 Multi Units Luxembourg, you can compare the effects of market volatilities on WisdomTree Natural and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Multi Units.
Diversification Opportunities for WisdomTree Natural and Multi Units
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WisdomTree and Multi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Multi Units go up and down completely randomly.
Pair Corralation between WisdomTree Natural and Multi Units
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 10.98 times more return on investment than Multi Units. However, WisdomTree Natural is 10.98 times more volatile than Multi Units Luxembourg. It trades about 0.07 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about -0.07 per unit of risk. If you would invest 102,687 in WisdomTree Natural Gas on August 30, 2024 and sell it today you would earn a total of 5,447 from holding WisdomTree Natural Gas or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. Multi Units Luxembourg
Performance |
| Timeline |
| WisdomTree Natural Gas |
| Multi Units Luxembourg |
WisdomTree Natural and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and Multi Units
The main advantage of trading using opposite WisdomTree Natural and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| WisdomTree Natural vs. GraniteShares 3x Short | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. WisdomTree Natural Gas |
| Multi Units vs. Leverage Shares 3x | Multi Units vs. GraniteShares 3x Short | Multi Units vs. WisdomTree Natural Gas | Multi Units vs. WisdomTree Natural Gas |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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