Correlation Between SPDR SP and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both SPDR SP and WisdomTree Natural 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 SPDR SP and WisdomTree Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Energy and WisdomTree Natural Gas, you can compare the effects of market volatilities on SPDR SP and WisdomTree Natural 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 SPDR SP with a short position of WisdomTree Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and WisdomTree Natural.
Diversification Opportunities for SPDR SP and WisdomTree Natural
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and WisdomTree is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Energy and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas and SPDR SP 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 SPDR SP Energy are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of SPDR SP i.e., SPDR SP and WisdomTree Natural go up and down completely randomly.
Pair Corralation between SPDR SP and WisdomTree Natural
Assuming the 90 days trading horizon SPDR SP is expected to generate 220.24 times less return on investment than WisdomTree Natural. But when comparing it to its historical volatility, SPDR SP Energy is 72.24 times less risky than WisdomTree Natural. It trades about 0.03 of its potential returns per unit of risk. WisdomTree Natural Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 753.00 in WisdomTree Natural Gas on September 3, 2024 and sell it today you would earn a total of 112,030 from holding WisdomTree Natural Gas or generate 14877.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Energy vs. WisdomTree Natural Gas
Performance |
| Timeline |
| SPDR SP Energy |
| WisdomTree Natural Gas |
SPDR SP and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and WisdomTree Natural
The main advantage of trading using opposite SPDR SP and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, WisdomTree Natural 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 WisdomTree Natural will offset losses from the drop in WisdomTree Natural's long position.| SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR Barclays Euro | SPDR SP vs. SPDR SP Consumer |
| WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 2x | WisdomTree Natural vs. WisdomTree Silver 3x | WisdomTree Natural vs. Leverage Shares 2x |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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