Correlation Between WisdomTree Yield and SHP ETF

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

By analyzing existing cross correlation between WisdomTree Yield Enhanced and SHP ETF Trust, you can compare the effects of market volatilities on WisdomTree Yield and SHP ETF 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 Yield with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Yield and SHP ETF.

Diversification Opportunities for WisdomTree Yield and SHP ETF

0.99

Correlation Coefficient

WisdomTree Yield  SHP ETF

No risk reduction

The 3 months correlation between WisdomTree and SHP is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Yield Enhanced and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and WisdomTree Yield 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 Yield Enhanced are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of WisdomTree Yield i.e., WisdomTree Yield and SHP ETF go up and down completely randomly.

Pair Corralation between WisdomTree Yield and SHP ETF

Given the investment horizon of 90 days WisdomTree Yield is expected to generate 1.19 times less return on investment than SHP ETF. In addition to that, WisdomTree Yield is 1.06 times more volatile than SHP ETF Trust. It trades about 0.08 of its total potential returns per unit of risk. SHP ETF Trust is currently generating about 0.1 per unit of volatility. If you would invest  4,604  in SHP ETF Trust on December 28, 2024 and sell it today you would earn a total of  84.45  from holding SHP ETF Trust or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

WisdomTree Yield Enhanced  vs.  SHP ETF Trust

WisdomTree Yield Enhanced

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Yield Enhanced are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, WisdomTree Yield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SHP ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SHP ETF Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, SHP ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with WisdomTree Yield and SHP ETF

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

The idea behind WisdomTree Yield Enhanced and SHP ETF Trust 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.