Correlation Between WisdomTree Natural and Amundi MSCI

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

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

Diversification Opportunities for WisdomTree Natural and Amundi MSCI

0.73

Correlation Coefficient

WisdomTree Natural  Amundi MSCI

Poor diversification

The 3 months correlation between WisdomTree and Amundi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Amundi MSCI Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi MSCI Pacific and WisdomTree Natural 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 Natural Gas are associated (or correlated) with Amundi MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi MSCI Pacific has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Amundi MSCI go up and down completely randomly.

Pair Corralation between WisdomTree Natural and Amundi MSCI

Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the Amundi MSCI. In addition to that, WisdomTree Natural is 9.28 times more volatile than Amundi MSCI Pacific. It trades about -0.03 of its total potential returns per unit of risk. Amundi MSCI Pacific is currently generating about -0.02 per unit of volatility. If you would invest  68,522  in Amundi MSCI Pacific on September 12, 2024 and sell it today you would lose (1,115) from holding Amundi MSCI Pacific or give up 1.63% of portfolio value over 90 days.

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

WisdomTree Natural Gas  vs.  Amundi MSCI Pacific

WisdomTree Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Natural Gas 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Amundi MSCI Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi MSCI Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Natural and Amundi MSCI

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

The idea behind WisdomTree Natural Gas and Amundi MSCI Pacific 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.