Correlation Between WisdomTree Cocoa and Multi Units

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

By analyzing existing cross correlation between WisdomTree Cocoa and Multi Units Luxembourg, you can compare the effects of market volatilities on WisdomTree Cocoa and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Cocoa and Multi Units.

Diversification Opportunities for WisdomTree Cocoa and Multi Units

-0.58

Correlation Coefficient

WisdomTree Cocoa  Multi Units

Excellent diversification

The 3 months correlation between WisdomTree and Multi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Cocoa and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of WisdomTree Cocoa i.e., WisdomTree Cocoa and Multi Units go up and down completely randomly.

Pair Corralation between WisdomTree Cocoa and Multi Units

If you would invest (100.00) in WisdomTree Cocoa on October 5, 2024 and sell it today you would earn a total of  100.00  from holding WisdomTree Cocoa or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

WisdomTree Cocoa  vs.  Multi Units Luxembourg

WisdomTree Cocoa

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days WisdomTree Cocoa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, WisdomTree Cocoa unveiled solid returns over the last few months and may actually be approaching a breakup point.

Multi Units Luxembourg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Units Luxembourg has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with WisdomTree Cocoa and Multi Units

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

The idea behind WisdomTree Cocoa and Multi Units Luxembourg 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.