Correlation Between IShares JP and WisdomTree Interest

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

By analyzing existing cross correlation between iShares JP Morgan and WisdomTree Interest Rate, you can compare the effects of market volatilities on IShares JP and WisdomTree Interest 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 IShares JP with a short position of WisdomTree Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and WisdomTree Interest.

Diversification Opportunities for IShares JP and WisdomTree Interest

0.76

Correlation Coefficient

IShares JP  WisdomTree Interest

Poor diversification

The 3 months correlation between IShares and WisdomTree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and WisdomTree Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Interest Rate and IShares JP 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 iShares JP Morgan are associated (or correlated) with WisdomTree Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Interest Rate has no effect on the direction of IShares JP i.e., IShares JP and WisdomTree Interest go up and down completely randomly.

Pair Corralation between IShares JP and WisdomTree Interest

Given the investment horizon of 90 days IShares JP is expected to generate 2.15 times less return on investment than WisdomTree Interest. In addition to that, IShares JP is 1.37 times more volatile than WisdomTree Interest Rate. It trades about 0.07 of its total potential returns per unit of risk. WisdomTree Interest Rate is currently generating about 0.2 per unit of volatility. If you would invest  2,181  in WisdomTree Interest Rate on September 19, 2024 and sell it today you would earn a total of  64.00  from holding WisdomTree Interest Rate or generate 2.93% return on investment over 90 days.

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

iShares JP Morgan  vs.  WisdomTree Interest Rate

iShares JP Morgan

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, IShares JP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WisdomTree Interest Rate

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Interest Rate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, WisdomTree Interest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares JP and WisdomTree Interest

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

The idea behind iShares JP Morgan and WisdomTree Interest Rate 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.