Correlation Between WisdomTree India and IXSE

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

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

Diversification Opportunities for WisdomTree India and IXSE

-0.72

Correlation Coefficient

WisdomTree India  IXSE

Pay attention - limited upside

The 3 months correlation between WisdomTree and IXSE is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree India Earnings and IXSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXSE and WisdomTree India 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 India Earnings are associated (or correlated) with IXSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXSE has no effect on the direction of WisdomTree India i.e., WisdomTree India and IXSE go up and down completely randomly.

Pair Corralation between WisdomTree India and IXSE

If you would invest  3,388  in IXSE on September 18, 2024 and sell it today you would earn a total of  0.00  from holding IXSE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

WisdomTree India Earnings  vs.  IXSE

WisdomTree India Earnings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree India Earnings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WisdomTree India is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

IXSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IXSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IXSE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree India and IXSE

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

The idea behind WisdomTree India Earnings and IXSE 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.