Correlation Between WisdomTree SmallCap and American Sierra
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and American Sierra 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 SmallCap and American Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Dividend and American Sierra Gold, you can compare the effects of market volatilities on WisdomTree SmallCap and American Sierra 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 SmallCap with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and American Sierra.
Diversification Opportunities for WisdomTree SmallCap and American Sierra
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Dividend and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and WisdomTree SmallCap 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 SmallCap Dividend are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and American Sierra go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and American Sierra
Considering the 90-day investment horizon WisdomTree SmallCap Dividend is expected to under-perform the American Sierra. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree SmallCap Dividend is 8.3 times less risky than American Sierra. The etf trades about -0.19 of its potential returns per unit of risk. The American Sierra Gold is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.40 in American Sierra Gold on September 21, 2024 and sell it today you would earn a total of 0.20 from holding American Sierra Gold or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Dividend vs. American Sierra Gold
Performance |
| Timeline |
| WisdomTree SmallCap |
| American Sierra Gold |
WisdomTree SmallCap and American Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and American Sierra
The main advantage of trading using opposite WisdomTree SmallCap and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.The idea behind WisdomTree SmallCap Dividend and American Sierra Gold 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.
| American Sierra vs. Gold79 Mines | American Sierra vs. Arctic Star Exploration | American Sierra vs. Arras Minerals Corp | American Sierra vs. American Creek Resources |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges |