Correlation Between IShares 0 and WisdomTree Managed

Can any of the company-specific risk be diversified away by investing in both IShares 0 and WisdomTree Managed 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 0 and WisdomTree Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 0 3 Month and WisdomTree Managed Futures, you can compare the effects of market volatilities on IShares 0 and WisdomTree Managed 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 0 with a short position of WisdomTree Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and WisdomTree Managed.

Diversification Opportunities for IShares 0 and WisdomTree Managed

-0.61

Correlation Coefficient

IShares 0  WisdomTree Managed

Excellent diversification

The 3 months correlation between IShares and WisdomTree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares 0 3 Month and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed and IShares 0 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 0 3 Month are associated (or correlated) with WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of IShares 0 i.e., IShares 0 and WisdomTree Managed go up and down completely randomly.

Pair Corralation between IShares 0 and WisdomTree Managed

Given the investment horizon of 90 days iShares 0 3 Month is expected to generate 0.05 times more return on investment than WisdomTree Managed. However, iShares 0 3 Month is 21.0 times less risky than WisdomTree Managed. It trades about 1.12 of its potential returns per unit of risk. WisdomTree Managed Futures is currently generating about -0.11 per unit of risk. If you would invest  10,022  in iShares 0 3 Month on June 26, 2024 and sell it today you would earn a total of  44.00  from holding iShares 0 3 Month or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

iShares 0 3 Month  vs.  WisdomTree Managed Futures

iShares 0 3

Risk-Adjusted Performance

96 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 3 Month are ranked lower than 96 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares 0 is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WisdomTree Managed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares 0 and WisdomTree Managed

The main advantage of trading using opposite IShares 0 and WisdomTree Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 position performs unexpectedly, WisdomTree Managed 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 Managed will offset losses from the drop in WisdomTree Managed's long position.

The idea behind iShares 0 3 Month and WisdomTree Managed Futures 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.