Correlation Between WisdomTree Short and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both WisdomTree Short and Franklin FTSE 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 Franklin FTSE 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 Franklin FTSE Brazil, you can compare the effects of market volatilities on WisdomTree Short and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Short and Franklin FTSE.
Diversification Opportunities for WisdomTree Short and Franklin FTSE
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WisdomTree and Franklin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Short GBP and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Brazil has no effect on the direction of WisdomTree Short i.e., WisdomTree Short and Franklin FTSE go up and down completely randomly.
Pair Corralation between WisdomTree Short and Franklin FTSE
Assuming the 90 days trading horizon WisdomTree Short GBP is expected to generate 0.33 times more return on investment than Franklin FTSE. However, WisdomTree Short GBP is 3.07 times less risky than Franklin FTSE. It trades about 0.03 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.05 per unit of risk. If you would invest 5,959 in WisdomTree Short GBP on September 2, 2024 and sell it today you would earn a total of 185.00 from holding WisdomTree Short GBP or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Short GBP vs. Franklin FTSE Brazil
Performance |
| Timeline |
| WisdomTree Short GBP |
| Franklin FTSE Brazil |
WisdomTree Short and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Short and Franklin FTSE
The main advantage of trading using opposite WisdomTree Short and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Short position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE'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 |
| Franklin FTSE vs. iShares Treasury Bond | Franklin FTSE vs. iShares Treasury Bond | Franklin FTSE vs. Amundi Treasury Bond | Franklin FTSE vs. SPDR Barclays 10 |
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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