Correlation Between FIRST SHIP and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and WisdomTree Investments, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and WisdomTree Investments.
Diversification Opportunities for FIRST SHIP and WisdomTree Investments
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FIRST and WisdomTree is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and WisdomTree Investments go up and down completely randomly.
Pair Corralation between FIRST SHIP and WisdomTree Investments
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 1.75 times more return on investment than WisdomTree Investments. However, FIRST SHIP is 1.75 times more volatile than WisdomTree Investments. It trades about 0.09 of its potential returns per unit of risk. WisdomTree Investments is currently generating about -0.31 per unit of risk. If you would invest 2.04 in FIRST SHIP LEASE on October 30, 2024 and sell it today you would earn a total of 0.16 from holding FIRST SHIP LEASE or generate 7.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. WisdomTree Investments
Performance |
| Timeline |
| FIRST SHIP LEASE |
| WisdomTree Investments |
FIRST SHIP and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and WisdomTree Investments
The main advantage of trading using opposite FIRST SHIP and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. Liberty Broadband | FIRST SHIP vs. Addtech AB | FIRST SHIP vs. NAGOYA RAILROAD | FIRST SHIP vs. Amkor Technology |
| WisdomTree Investments vs. INDO RAMA SYNTHETIC | WisdomTree Investments vs. Major Drilling Group | WisdomTree Investments vs. MAGNUM MINING EXP | WisdomTree Investments vs. Silicon Motion Technology |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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