Correlation Between ETRACS Monthly and WisdomTree Trust

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

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

Diversification Opportunities for ETRACS Monthly and WisdomTree Trust

0.54

Correlation Coefficient

ETRACS Monthly  WisdomTree Trust

Very weak diversification

The 3 months correlation between ETRACS and WisdomTree is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Trust and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with WisdomTree Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and WisdomTree Trust go up and down completely randomly.

Pair Corralation between ETRACS Monthly and WisdomTree Trust

Given the investment horizon of 90 days ETRACS Monthly Pay is expected to under-perform the WisdomTree Trust. In addition to that, ETRACS Monthly is 1.36 times more volatile than WisdomTree Trust . It trades about -0.08 of its total potential returns per unit of risk. WisdomTree Trust is currently generating about 0.05 per unit of volatility. If you would invest  11,311  in WisdomTree Trust on September 13, 2025 and sell it today you would earn a total of  251.00  from holding WisdomTree Trust or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

ETRACS Monthly Pay  vs.  WisdomTree Trust

ETRACS Monthly Pay

Risk-Adjusted Performance

Weakest

Over the last 90 days ETRACS Monthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRACS Monthly is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree Trust

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, WisdomTree Trust is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ETRACS Monthly and WisdomTree Trust

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

The idea behind ETRACS Monthly Pay and WisdomTree Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.