Correlation Between WisdomTree Cocoa and Franklin LibertyQ

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

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

Diversification Opportunities for WisdomTree Cocoa and Franklin LibertyQ

0.22

Correlation Coefficient

WisdomTree Cocoa  Franklin LibertyQ

Modest diversification

The 3 months correlation between WisdomTree and Franklin is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Cocoa and Franklin LibertyQ Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ Equity and WisdomTree Cocoa 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 Cocoa are associated (or correlated) with Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ Equity has no effect on the direction of WisdomTree Cocoa i.e., WisdomTree Cocoa and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between WisdomTree Cocoa and Franklin LibertyQ

Assuming the 90 days trading horizon WisdomTree Cocoa is expected to under-perform the Franklin LibertyQ. In addition to that, WisdomTree Cocoa is 5.27 times more volatile than Franklin LibertyQ Equity. It trades about -0.07 of its total potential returns per unit of risk. Franklin LibertyQ Equity is currently generating about -0.15 per unit of volatility. If you would invest  4,627  in Franklin LibertyQ Equity on December 11, 2024 and sell it today you would lose (327.00) from holding Franklin LibertyQ Equity or give up 7.07% of portfolio value over 90 days.

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

WisdomTree Cocoa  vs.  Franklin LibertyQ Equity

WisdomTree Cocoa

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Cocoa 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.

Franklin LibertyQ Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin LibertyQ Equity 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 Cocoa and Franklin LibertyQ

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

The idea behind WisdomTree Cocoa and Franklin LibertyQ Equity 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 Transaction History module to view history of all your transactions and understand their impact on performance.