Correlation Between WisdomTree Natural and KraneShares Electric
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and KraneShares Electric 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 KraneShares Electric 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 KraneShares Electric Vehicles, you can compare the effects of market volatilities on WisdomTree Natural and KraneShares Electric 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 KraneShares Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and KraneShares Electric.
Diversification Opportunities for WisdomTree Natural and KraneShares Electric
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and KraneShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and KraneShares Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Electric 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 KraneShares Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Electric has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and KraneShares Electric go up and down completely randomly.
Pair Corralation between WisdomTree Natural and KraneShares Electric
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 2.84 times more return on investment than KraneShares Electric. However, WisdomTree Natural is 2.84 times more volatile than KraneShares Electric Vehicles. It trades about 0.24 of its potential returns per unit of risk. KraneShares Electric Vehicles is currently generating about 0.12 per unit of risk. If you would invest 66,015 in WisdomTree Natural Gas on November 28, 2024 and sell it today you would earn a total of 14,765 from holding WisdomTree Natural Gas or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. KraneShares Electric Vehicles
Performance |
| Timeline |
| WisdomTree Natural Gas |
| KraneShares Electric |
WisdomTree Natural and KraneShares Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and KraneShares Electric
The main advantage of trading using opposite WisdomTree Natural and KraneShares Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, KraneShares Electric 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 KraneShares Electric will offset losses from the drop in KraneShares Electric'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 |
| KraneShares Electric vs. Vanguard FTSE Developed | KraneShares Electric vs. Leverage Shares 2x | KraneShares Electric vs. Amundi Index Solutions | KraneShares Electric vs. Amundi Index Solutions |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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