Correlation Between WisdomTree Issuer and Wisdomtree Digital

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

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

Diversification Opportunities for WisdomTree Issuer and Wisdomtree Digital

0.92

Correlation Coefficient

WisdomTree Issuer  Wisdomtree Digital

Almost no diversification

The 3 months correlation between WisdomTree and Wisdomtree is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Issuer ICAV and Wisdomtree Digital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Digital Trust and WisdomTree Issuer 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 Issuer ICAV are associated (or correlated) with Wisdomtree Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Digital Trust has no effect on the direction of WisdomTree Issuer i.e., WisdomTree Issuer and Wisdomtree Digital go up and down completely randomly.

Pair Corralation between WisdomTree Issuer and Wisdomtree Digital

Assuming the 90 days horizon WisdomTree Issuer is expected to generate 1.53 times less return on investment than Wisdomtree Digital. In addition to that, WisdomTree Issuer is 1.45 times more volatile than Wisdomtree Digital Trust. It trades about 0.19 of its total potential returns per unit of risk. Wisdomtree Digital Trust is currently generating about 0.43 per unit of volatility. If you would invest  1,579  in Wisdomtree Digital Trust on April 21, 2025 and sell it today you would earn a total of  536.00  from holding Wisdomtree Digital Trust or generate 33.95% return on investment over 90 days.

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

WisdomTree Issuer ICAV  vs.  Wisdomtree Digital Trust

WisdomTree Issuer ICAV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Issuer ICAV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, WisdomTree Issuer reported solid returns over the last few months and may actually be approaching a breakup point.

Wisdomtree Digital Trust

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Wisdomtree Digital Trust are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Wisdomtree Digital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Issuer and Wisdomtree Digital

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

The idea behind WisdomTree Issuer ICAV and Wisdomtree Digital Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.