Correlation Between TESCO PLC and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both TESCO PLC and WisdomTree Investments 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 TESCO PLC and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TESCO PLC ADR1 and WisdomTree Investments, you can compare the effects of market volatilities on TESCO PLC and WisdomTree Investments 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 TESCO PLC with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESCO PLC and WisdomTree Investments.
Diversification Opportunities for TESCO PLC and WisdomTree Investments
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TESCO and WisdomTree is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding TESCO PLC ADR1 and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and TESCO PLC 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 TESCO PLC ADR1 are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of TESCO PLC i.e., TESCO PLC and WisdomTree Investments go up and down completely randomly.
Pair Corralation between TESCO PLC and WisdomTree Investments
Assuming the 90 days trading horizon TESCO PLC is expected to generate 3.24 times less return on investment than WisdomTree Investments. In addition to that, TESCO PLC is 1.08 times more volatile than WisdomTree Investments. It trades about 0.08 of its total potential returns per unit of risk. WisdomTree Investments is currently generating about 0.27 per unit of volatility. If you would invest 941.00 in WisdomTree Investments on November 18, 2025 and sell it today you would earn a total of 423.00 from holding WisdomTree Investments or generate 44.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TESCO PLC ADR1 vs. WisdomTree Investments
Performance |
| Timeline |
| TESCO PLC ADR1 |
| WisdomTree Investments |
TESCO PLC and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TESCO PLC and WisdomTree Investments
The main advantage of trading using opposite TESCO PLC and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TESCO PLC position performs unexpectedly, WisdomTree Investments 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 Investments will offset losses from the drop in WisdomTree Investments' long position.| TESCO PLC vs. Treasure ASA | TESCO PLC vs. PT Bank Maybank | TESCO PLC vs. MOOG INC CL | TESCO PLC vs. Biotest Aktiengesellschaft |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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