Correlation Between WisdomTree Managed and Listed Funds

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

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

Diversification Opportunities for WisdomTree Managed and Listed Funds

Pay attention - limited upside

The 3 months correlation between WisdomTree and Listed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and WisdomTree Managed 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 Managed Futures are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and Listed Funds go up and down completely randomly.

Pair Corralation between WisdomTree Managed and Listed Funds

If you would invest  3,387  in WisdomTree Managed Futures on August 30, 2023 and sell it today you would earn a total of  86.00  from holding WisdomTree Managed Futures or generate 2.54% return on investment over 90 days.

WisdomTree Managed Futures  vs.  Listed Funds Trust

WisdomTree Managed

WisdomTree Performance

11 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. 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.

Listed Funds Trust

Listed Performance

0 of 100

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Listed Funds is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WisdomTree Managed and Listed Funds

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

The idea behind WisdomTree Managed Futures and Listed Funds 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.