Correlation Between WisdomTree Silver and Xtrackers Russell

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

By analyzing existing cross correlation between WisdomTree Silver 3x and Xtrackers Russell 2000, you can compare the effects of market volatilities on WisdomTree Silver and Xtrackers Russell 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 Silver with a short position of Xtrackers Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Silver and Xtrackers Russell.

Diversification Opportunities for WisdomTree Silver and Xtrackers Russell

-0.51

Correlation Coefficient

WisdomTree Silver  Xtrackers Russell

Excellent diversification

The 3 months correlation between WisdomTree and Xtrackers is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Silver 3x and Xtrackers Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Russell 2000 and WisdomTree Silver 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 Silver 3x are associated (or correlated) with Xtrackers Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Russell 2000 has no effect on the direction of WisdomTree Silver i.e., WisdomTree Silver and Xtrackers Russell go up and down completely randomly.

Pair Corralation between WisdomTree Silver and Xtrackers Russell

Assuming the 90 days trading horizon WisdomTree Silver 3x is expected to generate 4.81 times more return on investment than Xtrackers Russell. However, WisdomTree Silver is 4.81 times more volatile than Xtrackers Russell 2000. It trades about 0.18 of its potential returns per unit of risk. Xtrackers Russell 2000 is currently generating about 0.3 per unit of risk. If you would invest  405,700  in WisdomTree Silver 3x on October 25, 2024 and sell it today you would earn a total of  56,100  from holding WisdomTree Silver 3x or generate 13.83% return on investment over 90 days.

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

WisdomTree Silver 3x  vs.  Xtrackers Russell 2000

WisdomTree Silver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xtrackers Russell 2000

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Russell 2000 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Xtrackers Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WisdomTree Silver and Xtrackers Russell

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

The idea behind WisdomTree Silver 3x and Xtrackers Russell 2000 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.