Correlation Between WisdomTree Gold and WisdomTree Zinc

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

By analyzing existing cross correlation between WisdomTree Gold 3x and WisdomTree Zinc, you can compare the effects of market volatilities on WisdomTree Gold and WisdomTree Zinc 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 Gold with a short position of WisdomTree Zinc. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Gold and WisdomTree Zinc.

Diversification Opportunities for WisdomTree Gold and WisdomTree Zinc

0.7

Correlation Coefficient

WisdomTree Gold  WisdomTree Zinc

Poor diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Gold 3x and WisdomTree Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Zinc and WisdomTree Gold 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 Gold 3x are associated (or correlated) with WisdomTree Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Zinc has no effect on the direction of WisdomTree Gold i.e., WisdomTree Gold and WisdomTree Zinc go up and down completely randomly.

Pair Corralation between WisdomTree Gold and WisdomTree Zinc

Assuming the 90 days trading horizon WisdomTree Gold 3x is expected to under-perform the WisdomTree Zinc. In addition to that, WisdomTree Gold is 2.4 times more volatile than WisdomTree Zinc. It trades about -0.11 of its total potential returns per unit of risk. WisdomTree Zinc is currently generating about -0.16 per unit of volatility. If you would invest  1,018  in WisdomTree Zinc on December 3, 2024 and sell it today you would lose (108.00) from holding WisdomTree Zinc or give up 10.61% of portfolio value over 90 days.

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

WisdomTree Gold 3x  vs.  WisdomTree Zinc

WisdomTree Gold 3x

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Gold 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

WisdomTree Zinc

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Zinc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with WisdomTree Gold and WisdomTree Zinc

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

The idea behind WisdomTree Gold 3x and WisdomTree Zinc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.