Correlation Between WisdomTree CBOE and Western Asset
Can any of the company-specific risk be diversified away by investing in both WisdomTree CBOE and Western Asset 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 CBOE and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree CBOE SP and Western Asset Global, you can compare the effects of market volatilities on WisdomTree CBOE and Western Asset 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 CBOE with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree CBOE and Western Asset.
Diversification Opportunities for WisdomTree CBOE and Western Asset
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WisdomTree and Western is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree CBOE SP and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and WisdomTree CBOE 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 CBOE SP are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Global has no effect on the direction of WisdomTree CBOE i.e., WisdomTree CBOE and Western Asset go up and down completely randomly.
Pair Corralation between WisdomTree CBOE and Western Asset
Given the investment horizon of 90 days WisdomTree CBOE SP is expected to generate 1.09 times more return on investment than Western Asset. However, WisdomTree CBOE is 1.09 times more volatile than Western Asset Global. It trades about 0.14 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.06 per unit of risk. If you would invest 2,795 in WisdomTree CBOE SP on August 24, 2024 and sell it today you would earn a total of 600.00 from holding WisdomTree CBOE SP or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree CBOE SP vs. Western Asset Global
Performance |
| Timeline |
| WisdomTree CBOE SP |
| Western Asset Global |
WisdomTree CBOE and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree CBOE and Western Asset
The main advantage of trading using opposite WisdomTree CBOE and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree CBOE position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| WisdomTree CBOE vs. Global X SP | WisdomTree CBOE vs. Global X Nasdaq | WisdomTree CBOE vs. First Trust BuyWrite | WisdomTree CBOE vs. Amplify CWP Enhanced |
| Western Asset vs. MFS Investment Grade | Western Asset vs. Invesco High Income | Western Asset vs. Eaton Vance National | Western Asset vs. Nuveen California Select |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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