Correlation Between WisdomTree Natural and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and Franklin FTSE 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 Franklin FTSE 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 Franklin FTSE Asia, you can compare the effects of market volatilities on WisdomTree Natural and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Franklin FTSE.
Diversification Opportunities for WisdomTree Natural and Franklin FTSE
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and Franklin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Franklin FTSE Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Asia 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Asia has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Franklin FTSE go up and down completely randomly.
Pair Corralation between WisdomTree Natural and Franklin FTSE
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 19.61 times more return on investment than Franklin FTSE. However, WisdomTree Natural is 19.61 times more volatile than Franklin FTSE Asia. It trades about 0.04 of its potential returns per unit of risk. Franklin FTSE Asia is currently generating about 0.16 per unit of risk. If you would invest 109,622 in WisdomTree Natural Gas on September 13, 2024 and sell it today you would lose (5,616) from holding WisdomTree Natural Gas or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. Franklin FTSE Asia
Performance |
| Timeline |
| WisdomTree Natural Gas |
| Franklin FTSE Asia |
WisdomTree Natural and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and Franklin FTSE
The main advantage of trading using opposite WisdomTree Natural and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE'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 |
| Franklin FTSE vs. WisdomTree Natural Gas | Franklin FTSE vs. Leverage Shares 3x | Franklin FTSE vs. GraniteShares 3x Short | Franklin FTSE 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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