Correlation Between WisdomTree Broad and WisdomTree Brent
Can any of the company-specific risk be diversified away by investing in both WisdomTree Broad and WisdomTree Brent 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 Broad and WisdomTree Brent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Broad Commodities and WisdomTree Brent Crude, you can compare the effects of market volatilities on WisdomTree Broad and WisdomTree Brent 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 Broad with a short position of WisdomTree Brent. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Broad and WisdomTree Brent.
Diversification Opportunities for WisdomTree Broad and WisdomTree Brent
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Broad Commodities and WisdomTree Brent Crude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Brent Crude and WisdomTree Broad 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 Broad Commodities are associated (or correlated) with WisdomTree Brent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Brent Crude has no effect on the direction of WisdomTree Broad i.e., WisdomTree Broad and WisdomTree Brent go up and down completely randomly.
Pair Corralation between WisdomTree Broad and WisdomTree Brent
Assuming the 90 days trading horizon WisdomTree Broad is expected to generate 2.37 times less return on investment than WisdomTree Brent. But when comparing it to its historical volatility, WisdomTree Broad Commodities is 4.99 times less risky than WisdomTree Brent. It trades about 0.32 of its potential returns per unit of risk. WisdomTree Brent Crude is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,702 in WisdomTree Brent Crude on October 24, 2025 and sell it today you would earn a total of 225.00 from holding WisdomTree Brent Crude or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Broad Commodities vs. WisdomTree Brent Crude
Performance |
| Timeline |
| WisdomTree Broad Com |
| WisdomTree Brent Crude |
WisdomTree Broad and WisdomTree Brent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Broad and WisdomTree Brent
The main advantage of trading using opposite WisdomTree Broad and WisdomTree Brent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Broad position performs unexpectedly, WisdomTree Brent 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 Brent will offset losses from the drop in WisdomTree Brent's long position.| WisdomTree Broad vs. WisdomTree Zinc | WisdomTree Broad vs. WisdomTree Brent Crude | WisdomTree Broad vs. WisdomTree Aluminium 2x | WisdomTree Broad vs. WisdomTree Enhanced Commodity |
| WisdomTree Brent vs. WisdomTree Zinc | WisdomTree Brent vs. WisdomTree Aluminium 2x | WisdomTree Brent vs. WisdomTree Enhanced Commodity | WisdomTree Brent vs. WisdomTree Gold 3x |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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