Correlation Between WisdomTree Natural and JPM BetaBuilders
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and JPM BetaBuilders 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 Natural and JPM BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Natural Gas and JPM BetaBuilders Treasury, you can compare the effects of market volatilities on WisdomTree Natural and JPM BetaBuilders 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 Natural with a short position of JPM BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and JPM BetaBuilders.
Diversification Opportunities for WisdomTree Natural and JPM BetaBuilders
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and JPM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and JPM BetaBuilders Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders Treasury and WisdomTree Natural 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 Natural Gas are associated (or correlated) with JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders Treasury has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and JPM BetaBuilders go up and down completely randomly.
Pair Corralation between WisdomTree Natural and JPM BetaBuilders
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the JPM BetaBuilders. In addition to that, WisdomTree Natural is 6.91 times more volatile than JPM BetaBuilders Treasury. It trades about -0.02 of its total potential returns per unit of risk. JPM BetaBuilders Treasury is currently generating about 0.02 per unit of volatility. If you would invest 8,368 in JPM BetaBuilders Treasury on January 19, 2025 and sell it today you would earn a total of 312.00 from holding JPM BetaBuilders Treasury or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. JPM BetaBuilders Treasury
Performance |
| Timeline |
| WisdomTree Natural Gas |
| JPM BetaBuilders Treasury |
WisdomTree Natural and JPM BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and JPM BetaBuilders
The main advantage of trading using opposite WisdomTree Natural and JPM BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, JPM BetaBuilders 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 JPM BetaBuilders will offset losses from the drop in JPM BetaBuilders' long position.| WisdomTree Natural vs. Vanguard FTSE Developed | WisdomTree Natural vs. Leverage Shares 2x | WisdomTree Natural vs. Amundi Index Solutions | WisdomTree Natural vs. Amundi Index Solutions |
| JPM BetaBuilders vs. Leverage Shares 2x | JPM BetaBuilders vs. WisdomTree EURO STOXX | JPM BetaBuilders vs. GraniteShares 3x Long | JPM BetaBuilders vs. WisdomTree Coffee 2x |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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