Correlation Between ClimateRock and WisdomTree
Can any of the company-specific risk be diversified away by investing in both ClimateRock and WisdomTree 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 ClimateRock and WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ClimateRock Class A and WisdomTree, you can compare the effects of market volatilities on ClimateRock and WisdomTree 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 ClimateRock with a short position of WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClimateRock and WisdomTree.
Diversification Opportunities for ClimateRock and WisdomTree
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ClimateRock and WisdomTree is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ClimateRock Class A and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree and ClimateRock 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 ClimateRock Class A are associated (or correlated) with WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of ClimateRock i.e., ClimateRock and WisdomTree go up and down completely randomly.
Pair Corralation between ClimateRock and WisdomTree
Given the investment horizon of 90 days ClimateRock is expected to generate 28.76 times less return on investment than WisdomTree. But when comparing it to its historical volatility, ClimateRock Class A is 27.27 times less risky than WisdomTree. It trades about 0.26 of its potential returns per unit of risk. WisdomTree is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,038 in WisdomTree on August 30, 2024 and sell it today you would earn a total of 138.00 from holding WisdomTree or generate 13.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
ClimateRock Class A vs. WisdomTree
Performance |
| Timeline |
| ClimateRock Class |
| WisdomTree |
ClimateRock and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ClimateRock and WisdomTree
The main advantage of trading using opposite ClimateRock and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClimateRock position performs unexpectedly, WisdomTree 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 will offset losses from the drop in WisdomTree's long position.| ClimateRock vs. AlphaVest Acquisition Corp | ClimateRock vs. Golden Star Acquisition | ClimateRock vs. Alpha One | ClimateRock vs. Manaris Corp |
| WisdomTree vs. ClimateRock Class A | WisdomTree vs. CF Acquisition VII | WisdomTree vs. DP Cap Acquisition |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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