Correlation Between IShares SP and WisdomTree Continuous
Can any of the company-specific risk be diversified away by investing in both IShares SP and WisdomTree Continuous 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 IShares SP and WisdomTree Continuous into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP GSCI and WisdomTree Continuous Commodity, you can compare the effects of market volatilities on IShares SP and WisdomTree Continuous 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 IShares SP with a short position of WisdomTree Continuous. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and WisdomTree Continuous.
Diversification Opportunities for IShares SP and WisdomTree Continuous
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and WisdomTree is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP GSCI and WisdomTree Continuous Commodit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Continuous and IShares SP 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 iShares SP GSCI are associated (or correlated) with WisdomTree Continuous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Continuous has no effect on the direction of IShares SP i.e., IShares SP and WisdomTree Continuous go up and down completely randomly.
Pair Corralation between IShares SP and WisdomTree Continuous
Considering the 90-day investment horizon IShares SP is expected to generate 1.9 times less return on investment than WisdomTree Continuous. In addition to that, IShares SP is 1.27 times more volatile than WisdomTree Continuous Commodity. It trades about 0.04 of its total potential returns per unit of risk. WisdomTree Continuous Commodity is currently generating about 0.09 per unit of volatility. If you would invest 1,654 in WisdomTree Continuous Commodity on August 25, 2024 and sell it today you would earn a total of 257.00 from holding WisdomTree Continuous Commodity or generate 15.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP GSCI vs. WisdomTree Continuous Commodit
Performance |
| Timeline |
| iShares SP GSCI |
| WisdomTree Continuous |
IShares SP and WisdomTree Continuous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and WisdomTree Continuous
The main advantage of trading using opposite IShares SP and WisdomTree Continuous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, WisdomTree Continuous 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 Continuous will offset losses from the drop in WisdomTree Continuous' long position.| IShares SP vs. Invesco DB Commodity | IShares SP vs. iPath Bloomberg Commodity | IShares SP vs. Invesco DB Base | IShares SP vs. Invesco DB Agriculture |
| WisdomTree Continuous vs. First Trust Global | WisdomTree Continuous vs. iShares ESG Aware | WisdomTree Continuous vs. iShares Fallen Angels |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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