Correlation Between WisdomTree Short and UBS ETF
Can any of the company-specific risk be diversified away by investing in both WisdomTree Short and UBS ETF 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 UBS ETF 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 UBS ETF plc, you can compare the effects of market volatilities on WisdomTree Short and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Short and UBS ETF.
Diversification Opportunities for WisdomTree Short and UBS ETF
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WisdomTree and UBS is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Short GBP and UBS ETF plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF plc 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 UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF plc has no effect on the direction of WisdomTree Short i.e., WisdomTree Short and UBS ETF go up and down completely randomly.
Pair Corralation between WisdomTree Short and UBS ETF
Assuming the 90 days trading horizon WisdomTree Short GBP is expected to generate 0.53 times more return on investment than UBS ETF. However, WisdomTree Short GBP is 1.89 times less risky than UBS ETF. It trades about -0.14 of its potential returns per unit of risk. UBS ETF plc is currently generating about -0.16 per unit of risk. If you would invest 6,279 in WisdomTree Short GBP on November 28, 2024 and sell it today you would lose (71.00) from holding WisdomTree Short GBP or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Short GBP vs. UBS ETF plc
Performance |
| Timeline |
| WisdomTree Short GBP |
| UBS ETF plc |
WisdomTree Short and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Short and UBS ETF
The main advantage of trading using opposite WisdomTree Short and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Short position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.| WisdomTree Short vs. WisdomTree Zinc | WisdomTree Short vs. WisdomTree Brent Crude | WisdomTree Short vs. WisdomTree Aluminium 2x | WisdomTree Short vs. WisdomTree Enhanced Commodity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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