Correlation Between WisdomTree and FAM
Can any of the company-specific risk be diversified away by investing in both WisdomTree and FAM 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 and FAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree and FAM, you can compare the effects of market volatilities on WisdomTree and FAM 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 with a short position of FAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and FAM.
Diversification Opportunities for WisdomTree and FAM
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and FAM is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM and WisdomTree 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 are associated (or correlated) with FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of WisdomTree i.e., WisdomTree and FAM go up and down completely randomly.
Pair Corralation between WisdomTree and FAM
If you would invest 674.00 in FAM on September 1, 2024 and sell it today you would earn a total of 0.00 from holding FAM or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree vs. FAM
Performance |
| Timeline |
| WisdomTree |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
WisdomTree and FAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and FAM
The main advantage of trading using opposite WisdomTree and FAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, FAM 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 FAM will offset losses from the drop in FAM's long position.| WisdomTree vs. Absolute Health and | WisdomTree vs. AVVAA World Health | WisdomTree vs. Profitable Develop | WisdomTree vs. Active Health Foods |
| FAM vs. Blackstone Gso Long | FAM vs. Blackstone Gso Senior | FAM vs. Nuveen Floating Rate | FAM vs. Pioneer Floating Rate |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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