Correlation Between Freedom Holding and WisdomTree
Can any of the company-specific risk be diversified away by investing in both Freedom Holding 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 Freedom Holding and WisdomTree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and WisdomTree, you can compare the effects of market volatilities on Freedom Holding 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 Freedom Holding with a short position of WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and WisdomTree.
Diversification Opportunities for Freedom Holding and WisdomTree
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Freedom and WisdomTree is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree and Freedom Holding 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 Freedom Holding Corp 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 Freedom Holding i.e., Freedom Holding and WisdomTree go up and down completely randomly.
Pair Corralation between Freedom Holding and WisdomTree
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.01 times more return on investment than WisdomTree. However, Freedom Holding is 1.01 times more volatile than WisdomTree. It trades about 0.2 of its potential returns per unit of risk. WisdomTree is currently generating about 0.15 per unit of risk. If you would invest 9,375 in Freedom Holding Corp on August 23, 2024 and sell it today you would earn a total of 2,355 from holding Freedom Holding Corp or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. WisdomTree
Performance |
| Timeline |
| Freedom Holding Corp |
| WisdomTree |
Freedom Holding and WisdomTree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and WisdomTree
The main advantage of trading using opposite Freedom Holding and WisdomTree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding 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.| Freedom Holding vs. Evercore Partners | Freedom Holding vs. SCOR PK | Freedom Holding vs. Aquagold International | Freedom Holding vs. Small Cap Core |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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