Correlation Between CN DATANG and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both CN DATANG and WisdomTree Investments 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 CN DATANG and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN DATANG C and WisdomTree Investments, you can compare the effects of market volatilities on CN DATANG and WisdomTree Investments 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 CN DATANG with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and WisdomTree Investments.
Diversification Opportunities for CN DATANG and WisdomTree Investments
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between DT7 and WisdomTree is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and CN DATANG 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 CN DATANG C are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of CN DATANG i.e., CN DATANG and WisdomTree Investments go up and down completely randomly.
Pair Corralation between CN DATANG and WisdomTree Investments
Assuming the 90 days trading horizon CN DATANG C is expected to generate 1.66 times more return on investment than WisdomTree Investments. However, CN DATANG is 1.66 times more volatile than WisdomTree Investments. It trades about -0.09 of its potential returns per unit of risk. WisdomTree Investments is currently generating about -0.43 per unit of risk. If you would invest 25.00 in CN DATANG C on October 25, 2024 and sell it today you would lose (1.00) from holding CN DATANG C or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN DATANG C vs. WisdomTree Investments
Performance |
| Timeline |
| CN DATANG C |
| WisdomTree Investments |
CN DATANG and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and WisdomTree Investments
The main advantage of trading using opposite CN DATANG and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, WisdomTree Investments 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 Investments will offset losses from the drop in WisdomTree Investments' long position.| CN DATANG vs. SPARTAN STORES | CN DATANG vs. JIAHUA STORES | CN DATANG vs. AEON STORES | CN DATANG vs. COSTCO WHOLESALE CDR |
| WisdomTree Investments vs. Jacquet Metal Service | WisdomTree Investments vs. BII Railway Transportation | WisdomTree Investments vs. Harmony Gold Mining | WisdomTree Investments vs. De Grey Mining |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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