Correlation Between FlexShares Credit and WisdomTree High

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

By analyzing existing cross correlation between FlexShares Credit Scored Long and WisdomTree High Yield, you can compare the effects of market volatilities on FlexShares Credit and WisdomTree High 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 FlexShares Credit with a short position of WisdomTree High. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares Credit and WisdomTree High.

Diversification Opportunities for FlexShares Credit and WisdomTree High

-0.25

Correlation Coefficient

FlexShares Credit  WisdomTree High

Very good diversification

The 3 months correlation between FlexShares and WisdomTree is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Credit Scored Long and WisdomTree High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree High Yield and FlexShares Credit 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 FlexShares Credit Scored Long are associated (or correlated) with WisdomTree High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree High Yield has no effect on the direction of FlexShares Credit i.e., FlexShares Credit and WisdomTree High go up and down completely randomly.

Pair Corralation between FlexShares Credit and WisdomTree High

If you would invest  4,484  in WisdomTree High Yield on September 17, 2024 and sell it today you would earn a total of  0.00  from holding WisdomTree High Yield or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

FlexShares Credit Scored Long  vs.  WisdomTree High Yield

FlexShares Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Credit Scored Long has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, FlexShares Credit is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

WisdomTree High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, WisdomTree High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FlexShares Credit and WisdomTree High

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

The idea behind FlexShares Credit Scored Long and WisdomTree High Yield 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..