Correlation Between WisdomTree Natural and Invesco EURO
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and Invesco EURO 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 Invesco EURO 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 Invesco EURO STOXX, you can compare the effects of market volatilities on WisdomTree Natural and Invesco EURO 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 Invesco EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Invesco EURO.
Diversification Opportunities for WisdomTree Natural and Invesco EURO
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX 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 Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Invesco EURO go up and down completely randomly.
Pair Corralation between WisdomTree Natural and Invesco EURO
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 8.59 times more return on investment than Invesco EURO. However, WisdomTree Natural is 8.59 times more volatile than Invesco EURO STOXX. It trades about 0.34 of its potential returns per unit of risk. Invesco EURO STOXX is currently generating about 0.3 per unit of risk. If you would invest 154,275 in WisdomTree Natural Gas on November 27, 2024 and sell it today you would earn a total of 145,553 from holding WisdomTree Natural Gas or generate 94.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. Invesco EURO STOXX
Performance |
| Timeline |
| WisdomTree Natural Gas |
| Invesco EURO STOXX |
WisdomTree Natural and Invesco EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and Invesco EURO
The main advantage of trading using opposite WisdomTree Natural and Invesco EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, Invesco EURO 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 Invesco EURO will offset losses from the drop in Invesco EURO'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 |
| Invesco EURO vs. Invesco MSCI Emerging | Invesco EURO vs. Invesco Markets Plc | Invesco EURO vs. Invesco FTSE RAFI | Invesco EURO vs. Invesco FTSE Emerging |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |