Correlation Between WisdomTree and Beacon Financial

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

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

Diversification Opportunities for WisdomTree and Beacon Financial

-0.25

Correlation Coefficient

WisdomTree  Beacon Financial

Very good diversification

The 3 months correlation between WisdomTree and Beacon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and Beacon Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Financial and WisdomTree 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 are associated (or correlated) with Beacon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Financial has no effect on the direction of WisdomTree i.e., WisdomTree and Beacon Financial go up and down completely randomly.

Pair Corralation between WisdomTree and Beacon Financial

Allowing for the 90-day total investment horizon WisdomTree is expected to under-perform the Beacon Financial. But the stock apears to be less risky and, when comparing its historical volatility, WisdomTree is 1.1 times less risky than Beacon Financial. The stock trades about 0.0 of its potential returns per unit of risk. The Beacon Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,361  in Beacon Financial on October 9, 2025 and sell it today you would earn a total of  295.00  from holding Beacon Financial or generate 12.49% return on investment over 90 days.

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

WisdomTree  vs.  Beacon Financial

WisdomTree

Risk-Adjusted Performance

Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WisdomTree is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Beacon Financial

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Beacon Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree and Beacon Financial

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

The idea behind WisdomTree and Beacon Financial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.