Correlation Between WisdomTree Global and Pacer Cash

Can any of the company-specific risk be diversified away by investing in both WisdomTree Global and Pacer Cash 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 Global and Pacer Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree Global High and Pacer Cash Cows, you can compare the effects of market volatilities on WisdomTree Global and Pacer Cash 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 Global with a short position of Pacer Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Global and Pacer Cash.

Diversification Opportunities for WisdomTree Global and Pacer Cash

0.94

Correlation Coefficient

WisdomTree Global  Pacer Cash

Almost no diversification

The 3 months correlation between WisdomTree and Pacer is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Global High and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows and WisdomTree Global 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 Global High are associated (or correlated) with Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of WisdomTree Global i.e., WisdomTree Global and Pacer Cash go up and down completely randomly.

Pair Corralation between WisdomTree Global and Pacer Cash

Considering the 90-day investment horizon WisdomTree Global High is expected to generate 0.89 times more return on investment than Pacer Cash. However, WisdomTree Global High is 1.12 times less risky than Pacer Cash. It trades about -0.07 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about -0.12 per unit of risk. If you would invest  5,053  in WisdomTree Global High on January 31, 2024 and sell it today you would lose (59.00) from holding WisdomTree Global High or give up 1.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

WisdomTree Global High  vs.  Pacer Cash Cows

WisdomTree Global High

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Global High are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, WisdomTree Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pacer Cash Cows

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Cash Cows are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree Global and Pacer Cash

The main advantage of trading using opposite WisdomTree Global and Pacer Cash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Global position performs unexpectedly, Pacer Cash 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 Pacer Cash will offset losses from the drop in Pacer Cash's long position.

The idea behind WisdomTree Global High and Pacer Cash Cows 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.