Correlation Between WisdomTree Natural and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and SSgA SPDR 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 SSgA SPDR 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 SSgA SPDR ETFs, you can compare the effects of market volatilities on WisdomTree Natural and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and SSgA SPDR.
Diversification Opportunities for WisdomTree Natural and SSgA SPDR
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and SSgA is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and SSgA SPDR go up and down completely randomly.
Pair Corralation between WisdomTree Natural and SSgA SPDR
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the SSgA SPDR. In addition to that, WisdomTree Natural is 2.99 times more volatile than SSgA SPDR ETFs. It trades about 0.0 of its total potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.15 per unit of volatility. If you would invest 16,422 in SSgA SPDR ETFs on September 12, 2024 and sell it today you would earn a total of 1,671 from holding SSgA SPDR ETFs or generate 10.18% 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. SSgA SPDR ETFs
Performance |
| Timeline |
| WisdomTree Natural Gas |
| SSgA SPDR ETFs |
WisdomTree Natural and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and SSgA SPDR
The main advantage of trading using opposite WisdomTree Natural and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR'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 |
| SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. SP 500 VIX |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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