Correlation Between WisdomTree and Chimera Investment
Can any of the company-specific risk be diversified away by investing in both WisdomTree and Chimera Investment 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 and Chimera Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree and Chimera Investment, you can compare the effects of market volatilities on WisdomTree and Chimera Investment 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 with a short position of Chimera Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and Chimera Investment.
Diversification Opportunities for WisdomTree and Chimera Investment
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and Chimera is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and Chimera Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chimera Investment and WisdomTree 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 are associated (or correlated) with Chimera Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chimera Investment has no effect on the direction of WisdomTree i.e., WisdomTree and Chimera Investment go up and down completely randomly.
Pair Corralation between WisdomTree and Chimera Investment
Allowing for the 90-day total investment horizon WisdomTree is expected to generate 1.38 times more return on investment than Chimera Investment. However, WisdomTree is 1.38 times more volatile than Chimera Investment. It trades about 0.31 of its potential returns per unit of risk. Chimera Investment is currently generating about -0.16 per unit of risk. If you would invest 1,028 in WisdomTree on August 31, 2024 and sell it today you would earn a total of 148.00 from holding WisdomTree or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree vs. Chimera Investment
Performance |
| Timeline |
| WisdomTree |
| Chimera Investment |
WisdomTree and Chimera Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and Chimera Investment
The main advantage of trading using opposite WisdomTree and Chimera Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, Chimera Investment 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 Chimera Investment will offset losses from the drop in Chimera Investment's long position.| WisdomTree vs. Invesco Advantage MIT | WisdomTree vs. Invesco Municipal Trust | WisdomTree vs. Invesco California Value | WisdomTree vs. Victory Capital Holdings |
| Chimera Investment vs. Ellington Financial | Chimera Investment vs. Dynex Capital | Chimera Investment vs. Orchid Island Capital | Chimera Investment vs. Invesco Mortgage Capital |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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