Correlation Between BANK OF CHINA and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both BANK OF CHINA 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 BANK OF CHINA and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK OF CHINA and WisdomTree Investments, you can compare the effects of market volatilities on BANK OF CHINA 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 BANK OF CHINA with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OF CHINA and WisdomTree Investments.
Diversification Opportunities for BANK OF CHINA and WisdomTree Investments
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between BANK and WisdomTree is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding BANK OF CHINA and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and BANK OF CHINA 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 BANK OF CHINA 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 BANK OF CHINA i.e., BANK OF CHINA and WisdomTree Investments go up and down completely randomly.
Pair Corralation between BANK OF CHINA and WisdomTree Investments
Assuming the 90 days trading horizon BANK OF CHINA is expected to generate 2.97 times more return on investment than WisdomTree Investments. However, BANK OF CHINA is 2.97 times more volatile than WisdomTree Investments. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.07 per unit of risk. If you would invest 14.00 in BANK OF CHINA on October 11, 2024 and sell it today you would earn a total of 35.00 from holding BANK OF CHINA or generate 250.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OF CHINA vs. WisdomTree Investments
Performance |
| Timeline |
| BANK OF CHINA |
| WisdomTree Investments |
BANK OF CHINA and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OF CHINA and WisdomTree Investments
The main advantage of trading using opposite BANK OF CHINA and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OF CHINA 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.| BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc | BANK OF CHINA vs. Apple Inc |
| WisdomTree Investments vs. BANK OF CHINA | WisdomTree Investments vs. Virtu Financial | WisdomTree Investments vs. SYSTEMAIR AB | WisdomTree Investments vs. SOGECLAIR SA INH |
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 Stocks Directory module to find actively traded stocks across global markets.
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