Correlation Between WisdomTree China and Rayliant Quantamental

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and Rayliant Quantamental 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 China and Rayliant Quantamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree China ex State Owned and Rayliant Quantamental China, you can compare the effects of market volatilities on WisdomTree China and Rayliant Quantamental 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 China with a short position of Rayliant Quantamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and Rayliant Quantamental.

Diversification Opportunities for WisdomTree China and Rayliant Quantamental

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between WisdomTree and Rayliant is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and Rayliant Quantamental China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayliant Quantamental and WisdomTree China 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 China ex State Owned are associated (or correlated) with Rayliant Quantamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayliant Quantamental has no effect on the direction of WisdomTree China i.e., WisdomTree China and Rayliant Quantamental go up and down completely randomly.

Pair Corralation between WisdomTree China and Rayliant Quantamental

Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to generate 1.18 times more return on investment than Rayliant Quantamental. However, WisdomTree China is 1.18 times more volatile than Rayliant Quantamental China. It trades about 0.0 of its potential returns per unit of risk. Rayliant Quantamental China is currently generating about -0.01 per unit of risk. If you would invest  3,451  in WisdomTree China ex State Owned on November 9, 2024 and sell it today you would lose (345.00) from holding WisdomTree China ex State Owned or give up 10.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

WisdomTree China ex State Owne  vs.  Rayliant Quantamental China

 Performance 
       Timeline  
WisdomTree China 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days WisdomTree China ex State Owned has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WisdomTree China is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Rayliant Quantamental 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Rayliant Quantamental China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Rayliant Quantamental is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree China and Rayliant Quantamental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WisdomTree China and Rayliant Quantamental

The main advantage of trading using opposite WisdomTree China and Rayliant Quantamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, Rayliant Quantamental 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 Rayliant Quantamental will offset losses from the drop in Rayliant Quantamental's long position.
The idea behind WisdomTree China ex State Owned and Rayliant Quantamental China 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets