Correlation Between WisdomTree Investments and GVS SPA

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

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

Diversification Opportunities for WisdomTree Investments and GVS SPA

-0.89

Correlation Coefficient

WisdomTree Investments  GVS SPA

Pay attention - limited upside

The 3 months correlation between WisdomTree and GVS is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and GVS SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVS SPA and WisdomTree Investments 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 Investments are associated (or correlated) with GVS SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVS SPA has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and GVS SPA go up and down completely randomly.

Pair Corralation between WisdomTree Investments and GVS SPA

Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.19 times more return on investment than GVS SPA. However, WisdomTree Investments is 1.19 times more volatile than GVS SPA. It trades about 0.15 of its potential returns per unit of risk. GVS SPA is currently generating about -0.11 per unit of risk. If you would invest  858.00  in WisdomTree Investments on September 17, 2024 and sell it today you would earn a total of  238.00  from holding WisdomTree Investments or generate 27.74% return on investment over 90 days.

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

WisdomTree Investments  vs.  GVS SPA

WisdomTree Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

GVS SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GVS SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WisdomTree Investments and GVS SPA

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

The idea behind WisdomTree Investments and GVS SPA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.