Correlation Between WisdomTree New and Barings Global

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Can any of the company-specific risk be diversified away by investing in both WisdomTree New and Barings Global 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 New and Barings Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree New Economy and Barings Global Short, you can compare the effects of market volatilities on WisdomTree New and Barings Global 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 New with a short position of Barings Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree New and Barings Global.

Diversification Opportunities for WisdomTree New and Barings Global

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between WisdomTree and Barings is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree New Economy and Barings Global Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings Global Short and WisdomTree New 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 New Economy are associated (or correlated) with Barings Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings Global Short has no effect on the direction of WisdomTree New i.e., WisdomTree New and Barings Global go up and down completely randomly.

Pair Corralation between WisdomTree New and Barings Global

Given the investment horizon of 90 days WisdomTree New Economy is expected to under-perform the Barings Global. In addition to that, WisdomTree New is 1.21 times more volatile than Barings Global Short. It trades about -0.07 of its total potential returns per unit of risk. Barings Global Short is currently generating about 0.12 per unit of volatility. If you would invest  1,449  in Barings Global Short on November 2, 2024 and sell it today you would earn a total of  144.00  from holding Barings Global Short or generate 9.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

WisdomTree New Economy  vs.  Barings Global Short

 Performance 
       Timeline  
WisdomTree New Economy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days WisdomTree New Economy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.
Barings Global Short 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, Barings Global may actually be approaching a critical reversion point that can send shares even higher in March 2025.

WisdomTree New and Barings Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WisdomTree New and Barings Global

The main advantage of trading using opposite WisdomTree New and Barings Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree New position performs unexpectedly, Barings Global 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 Barings Global will offset losses from the drop in Barings Global's long position.
The idea behind WisdomTree New Economy and Barings Global Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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