Correlation Between WisdomTree Short and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree Short and Global X 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 Short and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Short GBP and Global X FinTech, you can compare the effects of market volatilities on WisdomTree Short and Global X 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 Short with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Short and Global X.
Diversification Opportunities for WisdomTree Short and Global X
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Short GBP and Global X FinTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FinTech and WisdomTree Short 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 Short GBP are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X FinTech has no effect on the direction of WisdomTree Short i.e., WisdomTree Short and Global X go up and down completely randomly.
Pair Corralation between WisdomTree Short and Global X
Assuming the 90 days trading horizon WisdomTree Short is expected to generate 5.2 times less return on investment than Global X. But when comparing it to its historical volatility, WisdomTree Short GBP is 2.9 times less risky than Global X. It trades about 0.15 of its potential returns per unit of risk. Global X FinTech is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 853.00 in Global X FinTech on September 2, 2024 and sell it today you would earn a total of 208.00 from holding Global X FinTech or generate 24.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Short GBP vs. Global X FinTech
Performance |
| Timeline |
| WisdomTree Short GBP |
| Global X FinTech |
WisdomTree Short and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Short and Global X
The main advantage of trading using opposite WisdomTree Short and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Short position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| WisdomTree Short vs. WisdomTree Natural Gas | WisdomTree Short vs. Leverage Shares 3x | WisdomTree Short vs. GraniteShares 3x Short | WisdomTree Short vs. Leverage Shares 3x |
| Global X vs. Vanguard FTSE Developed | Global X vs. Leverage Shares 2x | Global X vs. Amundi Index Solutions | Global X 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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