Correlation Between WisdomTree Managed and SPDR SP
Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and SPDR SP 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 SPDR SP 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 SPDR SP Regional, you can compare the effects of market volatilities on WisdomTree Managed and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and SPDR SP.
Diversification Opportunities for WisdomTree Managed and SPDR SP
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and SPDR is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and SPDR SP Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Regional 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Regional has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and SPDR SP go up and down completely randomly.
Pair Corralation between WisdomTree Managed and SPDR SP
Given the investment horizon of 90 days WisdomTree Managed is expected to generate 8.12 times less return on investment than SPDR SP. But when comparing it to its historical volatility, WisdomTree Managed Futures is 2.97 times less risky than SPDR SP. It trades about 0.03 of its potential returns per unit of risk. SPDR SP Regional is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,809 in SPDR SP Regional on November 9, 2024 and sell it today you would earn a total of 1,741 from holding SPDR SP Regional or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Managed Futures vs. SPDR SP Regional
Performance |
| Timeline |
| WisdomTree Managed |
| SPDR SP Regional |
WisdomTree Managed and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Managed and SPDR SP
The main advantage of trading using opposite WisdomTree Managed and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Managed position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's 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 |
| SPDR SP vs. SPDR SP Bank | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders | SPDR SP vs. Financial Select Sector |
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 CEOs Directory module to screen CEOs from public companies around the world.
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