Correlation Between LS 1x and WisdomTree Natural

Can any of the company-specific risk be diversified away by investing in both LS 1x and WisdomTree Natural 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 LS 1x and WisdomTree Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LS 1x Coinbase and WisdomTree Natural Gas, you can compare the effects of market volatilities on LS 1x and WisdomTree Natural 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 LS 1x with a short position of WisdomTree Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and WisdomTree Natural.

Diversification Opportunities for LS 1x and WisdomTree Natural

-0.73

Correlation Coefficient

LS 1x  WisdomTree Natural

Pay attention - limited upside

The 3 months correlation between COI1 and WisdomTree is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Coinbase and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas and LS 1x 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 LS 1x Coinbase are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of LS 1x i.e., LS 1x and WisdomTree Natural go up and down completely randomly.

Pair Corralation between LS 1x and WisdomTree Natural

Assuming the 90 days trading horizon LS 1x Coinbase is expected to under-perform the WisdomTree Natural. In addition to that, LS 1x is 1.24 times more volatile than WisdomTree Natural Gas. It trades about -0.09 of its total potential returns per unit of risk. WisdomTree Natural Gas is currently generating about 0.13 per unit of volatility. If you would invest  65,320  in WisdomTree Natural Gas on December 2, 2024 and sell it today you would earn a total of  12,865  from holding WisdomTree Natural Gas or generate 19.7% return on investment over 90 days.

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

LS 1x Coinbase  vs.  WisdomTree Natural Gas

LS 1x Coinbase

Risk-Adjusted Performance

Very Weak

Over the last 90 days LS 1x Coinbase 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.

WisdomTree Natural Gas

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Natural Gas are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Natural unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LS 1x and WisdomTree Natural

The main advantage of trading using opposite LS 1x and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, WisdomTree Natural 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 WisdomTree Natural will offset losses from the drop in WisdomTree Natural's long position.

The idea behind LS 1x Coinbase and WisdomTree Natural Gas 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.