Correlation Between WisdomTree Total and Global X

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

By analyzing existing cross correlation between WisdomTree Total Dividend and Global X SuperDividend, you can compare the effects of market volatilities on WisdomTree Total and Global X 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 Total with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Total and Global X.

Diversification Opportunities for WisdomTree Total and Global X

0.7

Correlation Coefficient

WisdomTree Total  Global X

Poor diversification

The 3 months correlation between WisdomTree and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Total Dividend and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend and WisdomTree Total 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 Total Dividend are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperDividend has no effect on the direction of WisdomTree Total i.e., WisdomTree Total and Global X go up and down completely randomly.

Pair Corralation between WisdomTree Total and Global X

Considering the 90-day investment horizon WisdomTree Total is expected to generate 8.08 times less return on investment than Global X. In addition to that, WisdomTree Total is 1.0 times more volatile than Global X SuperDividend. It trades about 0.01 of its total potential returns per unit of risk. Global X SuperDividend is currently generating about 0.11 per unit of volatility. If you would invest  1,782  in Global X SuperDividend on December 26, 2024 and sell it today you would earn a total of  86.00  from holding Global X SuperDividend or generate 4.83% return on investment over 90 days.

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

WisdomTree Total Dividend  vs.  Global X SuperDividend

WisdomTree Total Dividend

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Total Dividend are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, WisdomTree Total is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Global X SuperDividend

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SuperDividend are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WisdomTree Total and Global X

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

The idea behind WisdomTree Total Dividend and Global X SuperDividend 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .