Correlation Between WisdomTree Natural and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and FIRST TRUST 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 FIRST TRUST 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 FIRST TRUST GLOBAL, you can compare the effects of market volatilities on WisdomTree Natural and FIRST TRUST 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 FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and FIRST TRUST.
Diversification Opportunities for WisdomTree Natural and FIRST TRUST
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and FIRST is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL 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 FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST GLOBAL has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and FIRST TRUST go up and down completely randomly.
Pair Corralation between WisdomTree Natural and FIRST TRUST
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 6.94 times more return on investment than FIRST TRUST. However, WisdomTree Natural is 6.94 times more volatile than FIRST TRUST GLOBAL. It trades about 0.08 of its potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about -0.05 per unit of risk. If you would invest 54,040 in WisdomTree Natural Gas on September 20, 2024 and sell it today you would earn a total of 3,045 from holding WisdomTree Natural Gas or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| WisdomTree Natural Gas |
| FIRST TRUST GLOBAL |
WisdomTree Natural and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and FIRST TRUST
The main advantage of trading using opposite WisdomTree Natural and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST's long position.| WisdomTree Natural vs. WisdomTree Zinc | WisdomTree Natural vs. WisdomTree Brent Crude | WisdomTree Natural vs. WisdomTree Aluminium 2x | WisdomTree Natural vs. WisdomTree Enhanced Commodity |
| FIRST TRUST vs. GraniteShares 3x Short | FIRST TRUST vs. WisdomTree Natural Gas | FIRST TRUST vs. Leverage Shares 3x | FIRST TRUST vs. WisdomTree Natural Gas |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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