Correlation Between Abrdn Physical and WisdomTree International

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

By analyzing existing cross correlation between abrdn Physical Palladium and WisdomTree International SmallCap, you can compare the effects of market volatilities on Abrdn Physical and WisdomTree International 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 Abrdn Physical with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Physical and WisdomTree International.

Diversification Opportunities for Abrdn Physical and WisdomTree International

0.87

Correlation Coefficient

Abrdn Physical  WisdomTree International

Very poor diversification

The 3 months correlation between Abrdn and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Palladium and WisdomTree International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and Abrdn Physical 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 abrdn Physical Palladium are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Abrdn Physical i.e., Abrdn Physical and WisdomTree International go up and down completely randomly.

Pair Corralation between Abrdn Physical and WisdomTree International

Given the investment horizon of 90 days abrdn Physical Palladium is expected to generate 3.3 times more return on investment than WisdomTree International. However, Abrdn Physical is 3.3 times more volatile than WisdomTree International SmallCap. It trades about 0.24 of its potential returns per unit of risk. WisdomTree International SmallCap is currently generating about 0.33 per unit of risk. If you would invest  8,669  in abrdn Physical Palladium on April 24, 2025 and sell it today you would earn a total of  2,996  from holding abrdn Physical Palladium or generate 34.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

abrdn Physical Palladium  vs.  WisdomTree International Small

abrdn Physical Palladium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Palladium are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Abrdn Physical disclosed solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree International

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International SmallCap are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, WisdomTree International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abrdn Physical and WisdomTree International

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

The idea behind abrdn Physical Palladium and WisdomTree International SmallCap 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.