Correlation Between WisdomTree Natural and PIMCO Sterling
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and PIMCO Sterling 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 PIMCO Sterling 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 PIMCO Sterling Short, you can compare the effects of market volatilities on WisdomTree Natural and PIMCO Sterling 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 PIMCO Sterling. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and PIMCO Sterling.
Diversification Opportunities for WisdomTree Natural and PIMCO Sterling
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and PIMCO is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and PIMCO Sterling Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Sterling Short 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 PIMCO Sterling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Sterling Short has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and PIMCO Sterling go up and down completely randomly.
Pair Corralation between WisdomTree Natural and PIMCO Sterling
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to generate 145.97 times more return on investment than PIMCO Sterling. However, WisdomTree Natural is 145.97 times more volatile than PIMCO Sterling Short. It trades about 0.08 of its potential returns per unit of risk. PIMCO Sterling Short is currently generating about 0.67 per unit of risk. If you would invest 51,965 in WisdomTree Natural Gas on September 12, 2024 and sell it today you would earn a total of 3,200 from holding WisdomTree Natural Gas or generate 6.16% 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. PIMCO Sterling Short
Performance |
| Timeline |
| WisdomTree Natural Gas |
| PIMCO Sterling Short |
WisdomTree Natural and PIMCO Sterling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and PIMCO Sterling
The main advantage of trading using opposite WisdomTree Natural and PIMCO Sterling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, PIMCO Sterling 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 PIMCO Sterling will offset losses from the drop in PIMCO Sterling's long position.| WisdomTree Natural vs. GraniteShares 3x Short | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. WisdomTree SP 500 |
| PIMCO Sterling vs. GraniteShares 3x Short | PIMCO Sterling vs. WisdomTree Natural Gas | PIMCO Sterling vs. Leverage Shares 3x | PIMCO Sterling 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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