Correlation Between Highlight Communications and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both Highlight Communications 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 Highlight Communications and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highlight Communications AG and WisdomTree Investments, you can compare the effects of market volatilities on Highlight Communications 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 Highlight Communications with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and WisdomTree Investments.
Diversification Opportunities for Highlight Communications and WisdomTree Investments
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Highlight and WisdomTree is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and Highlight Communications 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 Highlight Communications AG 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 Highlight Communications i.e., Highlight Communications and WisdomTree Investments go up and down completely randomly.
Pair Corralation between Highlight Communications and WisdomTree Investments
Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the WisdomTree Investments. In addition to that, Highlight Communications is 3.74 times more volatile than WisdomTree Investments. It trades about -0.29 of its total potential returns per unit of risk. WisdomTree Investments is currently generating about -0.38 per unit of volatility. If you would invest 939.00 in WisdomTree Investments on December 4, 2024 and sell it today you would lose (87.00) from holding WisdomTree Investments or give up 9.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highlight Communications AG vs. WisdomTree Investments
Performance |
| Timeline |
| Highlight Communications |
| WisdomTree Investments |
Highlight Communications and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highlight Communications and WisdomTree Investments
The main advantage of trading using opposite Highlight Communications and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications 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.| Highlight Communications vs. Universal Entertainment | Highlight Communications vs. Tencent Music Entertainment | Highlight Communications vs. LG Display Co | Highlight Communications vs. Hollywood Bowl Group |
| WisdomTree Investments vs. CORNISH METALS INC | WisdomTree Investments vs. Evolution Mining Limited | WisdomTree Investments vs. Ringmetall SE | WisdomTree Investments vs. EMBARK EDUCATION LTD |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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