Correlation Between WisdomTree Mortgage and Vanguard Mortgage

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

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

Diversification Opportunities for WisdomTree Mortgage and Vanguard Mortgage

0.98

Correlation Coefficient

WisdomTree Mortgage  Vanguard Mortgage

Almost no diversification

The 3 months correlation between WisdomTree and Vanguard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Mortgage Plus and Vanguard Mortgage Backed Secur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mortgage and WisdomTree Mortgage 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 Mortgage Plus are associated (or correlated) with Vanguard Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mortgage has no effect on the direction of WisdomTree Mortgage i.e., WisdomTree Mortgage and Vanguard Mortgage go up and down completely randomly.

Pair Corralation between WisdomTree Mortgage and Vanguard Mortgage

Given the investment horizon of 90 days WisdomTree Mortgage is expected to generate 1.11 times less return on investment than Vanguard Mortgage. In addition to that, WisdomTree Mortgage is 1.29 times more volatile than Vanguard Mortgage Backed Securities. It trades about 0.09 of its total potential returns per unit of risk. Vanguard Mortgage Backed Securities is currently generating about 0.13 per unit of volatility. If you would invest  4,502  in Vanguard Mortgage Backed Securities on May 13, 2025 and sell it today you would earn a total of  121.00  from holding Vanguard Mortgage Backed Securities or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

WisdomTree Mortgage Plus  vs.  Vanguard Mortgage Backed Secur

WisdomTree Mortgage Plus

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Mortgage Plus are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, WisdomTree Mortgage is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Vanguard Mortgage

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mortgage Backed Securities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Vanguard Mortgage is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Mortgage and Vanguard Mortgage

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

The idea behind WisdomTree Mortgage Plus and Vanguard Mortgage Backed Securities 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.