Correlation Between WisdomTree Natural and LS 1x
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and LS 1x 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 LS 1x 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 LS 1x Coinbase, you can compare the effects of market volatilities on WisdomTree Natural and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and LS 1x.
Diversification Opportunities for WisdomTree Natural and LS 1x
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and COI1 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and LS 1x Coinbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Coinbase 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 LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Coinbase has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and LS 1x go up and down completely randomly.
Pair Corralation between WisdomTree Natural and LS 1x
Assuming the 90 days trading horizon WisdomTree Natural is expected to generate 26.47 times less return on investment than LS 1x. But when comparing it to its historical volatility, WisdomTree Natural Gas is 1.64 times less risky than LS 1x. It trades about 0.0 of its potential returns per unit of risk. LS 1x Coinbase is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 303.00 in LS 1x Coinbase on November 8, 2024 and sell it today you would earn a total of 276.00 from holding LS 1x Coinbase or generate 91.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. LS 1x Coinbase
Performance |
| Timeline |
| WisdomTree Natural Gas |
| LS 1x Coinbase |
WisdomTree Natural and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and LS 1x
The main advantage of trading using opposite WisdomTree Natural and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. GraniteShares 3x Short | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. GraniteShares 3x Long |
| LS 1x vs. iShares MSCI Japan | LS 1x vs. Amundi EUR High | LS 1x vs. iShares JP Morgan | LS 1x vs. Xtrackers MSCI |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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