Correlation Between WisdomTree Investments and GSW Immobilien

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

By analyzing existing cross correlation between WisdomTree Investments and GSW Immobilien AG, you can compare the effects of market volatilities on WisdomTree Investments and GSW Immobilien 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 GSW Immobilien. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and GSW Immobilien.

Diversification Opportunities for WisdomTree Investments and GSW Immobilien

-0.23

Correlation Coefficient

WisdomTree Investments  GSW Immobilien

Very good diversification

The 3 months correlation between WisdomTree and GSW is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and GSW Immobilien AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSW Immobilien AG 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 GSW Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSW Immobilien AG has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and GSW Immobilien go up and down completely randomly.

Pair Corralation between WisdomTree Investments and GSW Immobilien

Assuming the 90 days horizon WisdomTree Investments is expected to generate 1.93 times less return on investment than GSW Immobilien. But when comparing it to its historical volatility, WisdomTree Investments is 1.93 times less risky than GSW Immobilien. It trades about 0.07 of its potential returns per unit of risk. GSW Immobilien AG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  7,900  in GSW Immobilien AG on October 11, 2024 and sell it today you would earn a total of  1,100  from holding GSW Immobilien AG or generate 13.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

WisdomTree Investments  vs.  GSW Immobilien AG

WisdomTree Investments

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

GSW Immobilien AG

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GSW Immobilien AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental drivers, GSW Immobilien displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Investments and GSW Immobilien

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

The idea behind WisdomTree Investments and GSW Immobilien AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.