Correlation Between WisdomTree Managed and EA Series
Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and EA Series 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 Managed and EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Managed Futures and EA Series Trust, you can compare the effects of market volatilities on WisdomTree Managed and EA Series 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 Managed with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and EA Series.
Diversification Opportunities for WisdomTree Managed and EA Series
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and DRAI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and WisdomTree Managed 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 Managed Futures are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and EA Series go up and down completely randomly.
Pair Corralation between WisdomTree Managed and EA Series
Given the investment horizon of 90 days WisdomTree Managed Futures is expected to generate 1.71 times more return on investment than EA Series. However, WisdomTree Managed is 1.71 times more volatile than EA Series Trust. It trades about 0.05 of its potential returns per unit of risk. EA Series Trust is currently generating about -0.08 per unit of risk. If you would invest 3,538 in WisdomTree Managed Futures on August 30, 2024 and sell it today you would earn a total of 45.00 from holding WisdomTree Managed Futures or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Managed Futures vs. EA Series Trust
Performance |
| Timeline |
| WisdomTree Managed |
| EA Series Trust |
WisdomTree Managed and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Managed and EA Series
The main advantage of trading using opposite WisdomTree Managed and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Managed position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.| WisdomTree Managed vs. First Trust Managed | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. WisdomTree CBOE SP |
| EA Series vs. Vanguard Total Stock | EA Series vs. SPDR SP 500 | EA Series vs. iShares Core SP | EA Series vs. Vanguard Total Bond |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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