Correlation Between WisdomTree Target and Swan Hedged
Can any of the company-specific risk be diversified away by investing in both WisdomTree Target and Swan Hedged 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 Target and Swan Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Target Range and Swan Hedged Equity, you can compare the effects of market volatilities on WisdomTree Target and Swan Hedged 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 Target with a short position of Swan Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Target and Swan Hedged.
Diversification Opportunities for WisdomTree Target and Swan Hedged
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Swan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Target Range and Swan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swan Hedged Equity and WisdomTree Target 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 Target Range are associated (or correlated) with Swan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swan Hedged Equity has no effect on the direction of WisdomTree Target i.e., WisdomTree Target and Swan Hedged go up and down completely randomly.
Pair Corralation between WisdomTree Target and Swan Hedged
Considering the 90-day investment horizon WisdomTree Target Range is expected to generate 0.9 times more return on investment than Swan Hedged. However, WisdomTree Target Range is 1.11 times less risky than Swan Hedged. It trades about 0.24 of its potential returns per unit of risk. Swan Hedged Equity is currently generating about 0.12 per unit of risk. If you would invest 2,389 in WisdomTree Target Range on November 18, 2024 and sell it today you would earn a total of 49.00 from holding WisdomTree Target Range or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Target Range vs. Swan Hedged Equity
Performance |
| Timeline |
| WisdomTree Target Range |
| Swan Hedged Equity |
WisdomTree Target and Swan Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Target and Swan Hedged
The main advantage of trading using opposite WisdomTree Target and Swan Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Target position performs unexpectedly, Swan Hedged 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 Swan Hedged will offset losses from the drop in Swan Hedged's long position.| WisdomTree Target vs. Goldman Sachs ActiveBeta | WisdomTree Target vs. Frontera Group | WisdomTree Target vs. iShares iBonds Dec | WisdomTree Target vs. iShares iBonds Dec |
| Swan Hedged vs. Amplify BlackSwan Growth | Swan Hedged vs. Invesco SP 500 | Swan Hedged vs. Simplify Exchange Traded | Swan Hedged vs. Simplify Equity PLUS |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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