Correlation Between WisdomTree Managed and IShares Convertible
Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and IShares Convertible 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 IShares Convertible 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 iShares Convertible Bond, you can compare the effects of market volatilities on WisdomTree Managed and IShares Convertible 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 IShares Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and IShares Convertible.
Diversification Opportunities for WisdomTree Managed and IShares Convertible
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and IShares is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and iShares Convertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Convertible Bond 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 IShares Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Convertible Bond has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and IShares Convertible go up and down completely randomly.
Pair Corralation between WisdomTree Managed and IShares Convertible
Given the investment horizon of 90 days WisdomTree Managed is expected to generate 2.09 times less return on investment than IShares Convertible. In addition to that, WisdomTree Managed is 2.69 times more volatile than iShares Convertible Bond. It trades about 0.1 of its total potential returns per unit of risk. iShares Convertible Bond is currently generating about 0.55 per unit of volatility. If you would invest 8,382 in iShares Convertible Bond on September 1, 2024 and sell it today you would earn a total of 546.00 from holding iShares Convertible Bond or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
WisdomTree Managed Futures vs. iShares Convertible Bond
Performance |
| Timeline |
| WisdomTree Managed |
| iShares Convertible Bond |
WisdomTree Managed and IShares Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Managed and IShares Convertible
The main advantage of trading using opposite WisdomTree Managed and IShares Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Managed position performs unexpectedly, IShares Convertible 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 IShares Convertible will offset losses from the drop in IShares Convertible's long position.| WisdomTree Managed vs. First Trust LongShort | WisdomTree Managed vs. First Trust Alternative | WisdomTree Managed vs. iMGP DBi Managed | WisdomTree Managed vs. First Trust Japan |
| IShares Convertible vs. VanEck Vectors Moodys | IShares Convertible vs. BondBloxx ETF Trust | IShares Convertible vs. Vanguard ESG Corporate | IShares Convertible vs. Vanguard Intermediate Term Corporate |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |