Correlation Between WisdomTree Interest and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Interest and First Trust 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 Interest and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Interest Rate and First Trust TCW, you can compare the effects of market volatilities on WisdomTree Interest and First Trust 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 Interest with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Interest and First Trust.
Diversification Opportunities for WisdomTree Interest and First Trust
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and First is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Interest Rate and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and WisdomTree Interest 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 Interest Rate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of WisdomTree Interest i.e., WisdomTree Interest and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Interest and First Trust
Given the investment horizon of 90 days WisdomTree Interest Rate is expected to generate 0.86 times more return on investment than First Trust. However, WisdomTree Interest Rate is 1.17 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.08 per unit of risk. If you would invest 1,974 in WisdomTree Interest Rate on August 27, 2024 and sell it today you would earn a total of 281.00 from holding WisdomTree Interest Rate or generate 14.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Interest Rate vs. First Trust TCW
Performance |
| Timeline |
| WisdomTree Interest Rate |
| First Trust TCW |
WisdomTree Interest and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Interest and First Trust
The main advantage of trading using opposite WisdomTree Interest and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Interest position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind WisdomTree Interest Rate and First Trust TCW pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| First Trust vs. First Trust TCW | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Senior |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |