Correlation Between KFA Mount and WisdomTree Managed
Can any of the company-specific risk be diversified away by investing in both KFA Mount and WisdomTree Managed 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 KFA Mount and WisdomTree Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KFA Mount Lucas and WisdomTree Managed Futures, you can compare the effects of market volatilities on KFA Mount and WisdomTree Managed 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 KFA Mount with a short position of WisdomTree Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of KFA Mount and WisdomTree Managed.
Diversification Opportunities for KFA Mount and WisdomTree Managed
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between KFA and WisdomTree is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding KFA Mount Lucas and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed and KFA Mount 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 KFA Mount Lucas are associated (or correlated) with WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of KFA Mount i.e., KFA Mount and WisdomTree Managed go up and down completely randomly.
Pair Corralation between KFA Mount and WisdomTree Managed
Given the investment horizon of 90 days KFA Mount Lucas is expected to under-perform the WisdomTree Managed. In addition to that, KFA Mount is 1.39 times more volatile than WisdomTree Managed Futures. It trades about -0.1 of its total potential returns per unit of risk. WisdomTree Managed Futures is currently generating about 0.0 per unit of volatility. If you would invest 3,474 in WisdomTree Managed Futures on November 30, 2024 and sell it today you would lose (1.00) from holding WisdomTree Managed Futures or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KFA Mount Lucas vs. WisdomTree Managed Futures
Performance |
| Timeline |
| KFA Mount Lucas |
| WisdomTree Managed |
KFA Mount and WisdomTree Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KFA Mount and WisdomTree Managed
The main advantage of trading using opposite KFA Mount and WisdomTree Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KFA Mount position performs unexpectedly, WisdomTree Managed 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 Managed will offset losses from the drop in WisdomTree Managed's long position.| KFA Mount vs. iMGP DBi Managed | KFA Mount vs. Simplify Exchange Traded | KFA Mount vs. Simplify Interest Rate | KFA Mount vs. AGFiQ Market Neutral |
| WisdomTree Managed vs. First Trust Managed | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. WisdomTree CBOE SP |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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