Correlation Between IShares Trust and WisdomTree Continuous

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

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

Diversification Opportunities for IShares Trust and WisdomTree Continuous

0.62

Correlation Coefficient

IShares Trust  WisdomTree Continuous

Poor diversification

The 3 months correlation between IShares and WisdomTree is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and WisdomTree Continuous Commodit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Continuous and IShares Trust 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 iShares Trust are associated (or correlated) with WisdomTree Continuous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Continuous has no effect on the direction of IShares Trust i.e., IShares Trust and WisdomTree Continuous go up and down completely randomly.

Pair Corralation between IShares Trust and WisdomTree Continuous

Given the investment horizon of 90 days IShares Trust is expected to generate 4.11 times less return on investment than WisdomTree Continuous. But when comparing it to its historical volatility, iShares Trust is 2.77 times less risky than WisdomTree Continuous. It trades about 0.1 of its potential returns per unit of risk. WisdomTree Continuous Commodity is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,894  in WisdomTree Continuous Commodity on May 3, 2025 and sell it today you would earn a total of  118.00  from holding WisdomTree Continuous Commodity or generate 6.23% return on investment over 90 days.

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

iShares Trust   vs.  WisdomTree Continuous Commodit

iShares Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WisdomTree Continuous

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Continuous Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, WisdomTree Continuous may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares Trust and WisdomTree Continuous

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

The idea behind iShares Trust and WisdomTree Continuous Commodity 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.