Correlation Between WisdomTree Aluminium and WisdomTree DAX
Can any of the company-specific risk be diversified away by investing in both WisdomTree Aluminium and WisdomTree DAX 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 Aluminium and WisdomTree DAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Aluminium 2x and WisdomTree DAX 30, you can compare the effects of market volatilities on WisdomTree Aluminium and WisdomTree DAX 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 Aluminium with a short position of WisdomTree DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Aluminium and WisdomTree DAX.
Diversification Opportunities for WisdomTree Aluminium and WisdomTree DAX
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Aluminium 2x and WisdomTree DAX 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree DAX 30 and WisdomTree Aluminium 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 Aluminium 2x are associated (or correlated) with WisdomTree DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree DAX 30 has no effect on the direction of WisdomTree Aluminium i.e., WisdomTree Aluminium and WisdomTree DAX go up and down completely randomly.
Pair Corralation between WisdomTree Aluminium and WisdomTree DAX
Assuming the 90 days trading horizon WisdomTree Aluminium is expected to generate 40.32 times less return on investment than WisdomTree DAX. In addition to that, WisdomTree Aluminium is 1.06 times more volatile than WisdomTree DAX 30. It trades about 0.0 of its total potential returns per unit of risk. WisdomTree DAX 30 is currently generating about 0.06 per unit of volatility. If you would invest 1,440,850 in WisdomTree DAX 30 on September 2, 2024 and sell it today you would earn a total of 1,163,200 from holding WisdomTree DAX 30 or generate 80.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Aluminium 2x vs. WisdomTree DAX 30
Performance |
| Timeline |
| WisdomTree Aluminium |
| WisdomTree DAX 30 |
WisdomTree Aluminium and WisdomTree DAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Aluminium and WisdomTree DAX
The main advantage of trading using opposite WisdomTree Aluminium and WisdomTree DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Aluminium position performs unexpectedly, WisdomTree DAX 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 DAX will offset losses from the drop in WisdomTree DAX's long position.| WisdomTree Aluminium vs. GraniteShares 3x Short | WisdomTree Aluminium vs. WisdomTree Natural Gas | WisdomTree Aluminium vs. Leverage Shares 3x | WisdomTree Aluminium vs. WisdomTree SP 500 |
| WisdomTree DAX vs. WisdomTree Zinc | WisdomTree DAX vs. WisdomTree Brent Crude | WisdomTree DAX vs. WisdomTree Aluminium 2x | WisdomTree DAX vs. WisdomTree Enhanced Commodity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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