Correlation Between WisdomTree 9060 and First Trust

Can any of the company-specific risk be diversified away by investing in both WisdomTree 9060 and First Trust 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 9060 and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree 9060 Balanced and First Trust Multi Asset, you can compare the effects of market volatilities on WisdomTree 9060 and First Trust 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 9060 with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree 9060 and First Trust.

Diversification Opportunities for WisdomTree 9060 and First Trust

0.61

Correlation Coefficient

WisdomTree 9060  First Trust

Poor diversification

The 3 months correlation between WisdomTree and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree 9060 Balanced and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and WisdomTree 9060 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 9060 Balanced are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Multi has no effect on the direction of WisdomTree 9060 i.e., WisdomTree 9060 and First Trust go up and down completely randomly.

Pair Corralation between WisdomTree 9060 and First Trust

Given the investment horizon of 90 days WisdomTree 9060 Balanced is expected to generate 1.36 times more return on investment than First Trust. However, WisdomTree 9060 is 1.36 times more volatile than First Trust Multi Asset. It trades about 0.28 of its potential returns per unit of risk. First Trust Multi Asset is currently generating about -0.15 per unit of risk. If you would invest  4,278  in WisdomTree 9060 Balanced on March 20, 2024 and sell it today you would earn a total of  144.00  from holding WisdomTree 9060 Balanced or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.95%
Values	Daily Returns

WisdomTree 9060 Balanced  vs.  First Trust Multi Asset

WisdomTree 9060 Balanced

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree 9060 Balanced are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, WisdomTree 9060 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Trust Multi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Asset are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, First Trust is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WisdomTree 9060 and First Trust

The main advantage of trading using opposite WisdomTree 9060 and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree 9060 position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.

The idea behind WisdomTree 9060 Balanced and First Trust Multi Asset 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.