Correlation Between WisdomTree MidCap and Globex Mining

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

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

Diversification Opportunities for WisdomTree MidCap and Globex Mining

0.44

Correlation Coefficient

WisdomTree MidCap  Globex Mining

Very weak diversification

The 3 months correlation between WisdomTree and Globex is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Dividend and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and WisdomTree MidCap 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 MidCap Dividend are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and Globex Mining go up and down completely randomly.

Pair Corralation between WisdomTree MidCap and Globex Mining

Considering the 90-day investment horizon WisdomTree MidCap Dividend is expected to under-perform the Globex Mining. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree MidCap Dividend is 1.92 times less risky than Globex Mining. The etf trades about -0.03 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  103.00  in Globex Mining Enterprises on February 22, 2025 and sell it today you would lose (3.00) from holding Globex Mining Enterprises or give up 2.91% of portfolio value over 90 days.

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

WisdomTree MidCap Dividend  vs.  Globex Mining Enterprises

WisdomTree MidCap

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree MidCap Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WisdomTree MidCap is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Globex Mining Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globex Mining Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Globex Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WisdomTree MidCap and Globex Mining

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

The idea behind WisdomTree MidCap Dividend and Globex Mining Enterprises 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 Anywhere module to track or share privately all of your investments from the convenience of any device.