Correlation Between WisdomTree Natural and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI USA, you can compare the effects of market volatilities on WisdomTree Natural and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Xtrackers MSCI.
Diversification Opportunities for WisdomTree Natural and Xtrackers MSCI
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and Xtrackers is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI USA has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Natural and Xtrackers MSCI
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 35.92 times more return on investment than Xtrackers MSCI. However, WisdomTree Natural is 35.92 times more volatile than Xtrackers MSCI USA. It trades about 0.02 of its potential returns per unit of risk. Xtrackers MSCI USA is currently generating about 0.11 per unit of risk. If you would invest 558,700 in WisdomTree Natural Gas on September 2, 2024 and sell it today you would lose (445,917) from holding WisdomTree Natural Gas or give up 79.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. Xtrackers MSCI USA
Performance |
| Timeline |
| WisdomTree Natural Gas |
| Xtrackers MSCI USA |
WisdomTree Natural and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and Xtrackers MSCI
The main advantage of trading using opposite WisdomTree Natural and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. Vanguard FTSE Developed | Xtrackers MSCI vs. Leverage Shares 2x | Xtrackers MSCI vs. Amundi Index Solutions | Xtrackers MSCI vs. Amundi Index Solutions |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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