Correlation Between WisdomTree Floating and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree Floating 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 Floating 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 Floating Rate and Global X SP, you can compare the effects of market volatilities on WisdomTree Floating 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 Floating with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Floating and Global X.
Diversification Opportunities for WisdomTree Floating and Global X
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and WisdomTree Floating 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 Floating Rate 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 SP has no effect on the direction of WisdomTree Floating i.e., WisdomTree Floating and Global X go up and down completely randomly.
Pair Corralation between WisdomTree Floating and Global X
Given the investment horizon of 90 days WisdomTree Floating is expected to generate 6.05 times less return on investment than Global X. But when comparing it to its historical volatility, WisdomTree Floating Rate is 42.95 times less risky than Global X. It trades about 1.03 of its potential returns per unit of risk. Global X SP is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,260 in Global X SP on August 26, 2024 and sell it today you would earn a total of 85.00 from holding Global X SP or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Floating Rate vs. Global X SP
Performance |
| Timeline |
| WisdomTree Floating Rate |
| Global X SP |
WisdomTree Floating and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Floating and Global X
The main advantage of trading using opposite WisdomTree Floating and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Floating 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 Floating vs. First Trust Low | WisdomTree Floating vs. First Trust Senior | WisdomTree Floating vs. First Trust TCW | WisdomTree Floating vs. First Trust Tactical |
| Global X vs. FT Vest Equity | Global X vs. Northern Lights | Global X vs. Dimensional International High | Global X vs. First Trust Exchange Traded |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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