Correlation Between WisdomTree Investments and Li-FT Power

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

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

Diversification Opportunities for WisdomTree Investments and Li-FT Power

0.0

Correlation Coefficient

WisdomTree Investments  Li-FT Power

Pay attention - limited upside

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

Pair Corralation between WisdomTree Investments and Li-FT Power

If you would invest  0.00  in Li FT Power on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Li FT Power or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.88%
Values	Daily Returns

WisdomTree Investments  vs.  Li FT Power

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 fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

Li FT Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li FT Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Li-FT Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WisdomTree Investments and Li-FT Power

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

The idea behind WisdomTree Investments and Li FT Power 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.