Correlation Between Global X and WisdomTree BioRevolution

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

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

Diversification Opportunities for Global X and WisdomTree BioRevolution

0.98

Correlation Coefficient

Global X  WisdomTree BioRevolution

Almost no diversification

The 3 months correlation between Global and WisdomTree is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Global X Genomics and WisdomTree BioRevolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree BioRevolution and Global X 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 Global X Genomics are associated (or correlated) with WisdomTree BioRevolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree BioRevolution has no effect on the direction of Global X i.e., Global X and WisdomTree BioRevolution go up and down completely randomly.

Pair Corralation between Global X and WisdomTree BioRevolution

Given the investment horizon of 90 days Global X Genomics is expected to under-perform the WisdomTree BioRevolution. In addition to that, Global X is 1.42 times more volatile than WisdomTree BioRevolution. It trades about -0.12 of its total potential returns per unit of risk. WisdomTree BioRevolution is currently generating about -0.11 per unit of volatility. If you would invest  1,431  in WisdomTree BioRevolution on December 30, 2024 and sell it today you would lose (129.00) from holding WisdomTree BioRevolution or give up 9.01% of portfolio value over 90 days.

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

Global X Genomics  vs.  WisdomTree BioRevolution

Global X Genomics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Genomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

WisdomTree BioRevolution

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree BioRevolution has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Global X and WisdomTree BioRevolution

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

The idea behind Global X Genomics and WisdomTree BioRevolution 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.