Correlation Between WisdomTree Investments and CITIC

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

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

Diversification Opportunities for WisdomTree Investments and CITIC

0.85

Correlation Coefficient

WisdomTree Investments  CITIC

Very poor diversification

The 3 months correlation between WisdomTree and CITIC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and CITIC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Limited and WisdomTree Investments 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 Investments are associated (or correlated) with CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Limited has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and CITIC go up and down completely randomly.

Pair Corralation between WisdomTree Investments and CITIC

Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.49 times more return on investment than CITIC. However, WisdomTree Investments is 1.49 times more volatile than CITIC Limited. It trades about 0.18 of its potential returns per unit of risk. CITIC Limited is currently generating about 0.15 per unit of risk. If you would invest  821.00  in WisdomTree Investments on May 27, 2025 and sell it today you would earn a total of  282.00  from holding WisdomTree Investments or generate 34.35% return on investment over 90 days.

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

WisdomTree Investments  vs.  CITIC Limited

WisdomTree Investments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

CITIC Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Investments and CITIC

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

The idea behind WisdomTree Investments and CITIC Limited 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.