Correlation Between Leverage Shares and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and WisdomTree Natural 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 Leverage Shares and WisdomTree Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 2x and WisdomTree Natural Gas, you can compare the effects of market volatilities on Leverage Shares and WisdomTree Natural 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 Leverage Shares with a short position of WisdomTree Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and WisdomTree Natural.
Diversification Opportunities for Leverage Shares and WisdomTree Natural
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and WisdomTree is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas and Leverage Shares 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 Leverage Shares 2x are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of Leverage Shares i.e., Leverage Shares and WisdomTree Natural go up and down completely randomly.
Pair Corralation between Leverage Shares and WisdomTree Natural
Assuming the 90 days trading horizon Leverage Shares is expected to generate 3.3 times less return on investment than WisdomTree Natural. But when comparing it to its historical volatility, Leverage Shares 2x is 6.75 times less risky than WisdomTree Natural. It trades about 0.33 of its potential returns per unit of risk. WisdomTree Natural Gas is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 86,363 in WisdomTree Natural Gas on September 2, 2024 and sell it today you would earn a total of 26,420 from holding WisdomTree Natural Gas or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. WisdomTree Natural Gas
Performance |
| Timeline |
| Leverage Shares 2x |
| WisdomTree Natural Gas |
Leverage Shares and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and WisdomTree Natural
The main advantage of trading using opposite Leverage Shares and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, WisdomTree Natural 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 WisdomTree Natural will offset losses from the drop in WisdomTree Natural's long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 |
| WisdomTree Natural vs. WisdomTree Zinc | WisdomTree Natural vs. WisdomTree Brent Crude | WisdomTree Natural vs. WisdomTree Aluminium 2x | WisdomTree Natural vs. WisdomTree Enhanced Commodity |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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