Correlation Between TrueShares Technology and WisdomTree International

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

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

Diversification Opportunities for TrueShares Technology and WisdomTree International

-0.09

Correlation Coefficient

TrueShares Technology  WisdomTree International

Good diversification

The 3 months correlation between TrueShares and WisdomTree is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding TrueShares Technology AI and WisdomTree International Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and TrueShares Technology 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 TrueShares Technology AI are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of TrueShares Technology i.e., TrueShares Technology and WisdomTree International go up and down completely randomly.

Pair Corralation between TrueShares Technology and WisdomTree International

Given the investment horizon of 90 days TrueShares Technology AI is expected to under-perform the WisdomTree International. In addition to that, TrueShares Technology is 3.14 times more volatile than WisdomTree International Hedged. It trades about -0.18 of its total potential returns per unit of risk. WisdomTree International Hedged is currently generating about -0.22 per unit of volatility. If you would invest  4,493  in WisdomTree International Hedged on October 6, 2024 and sell it today you would lose (116.00) from holding WisdomTree International Hedged or give up 2.58% of portfolio value over 90 days.

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

TrueShares Technology AI  vs.  WisdomTree International Hedge

TrueShares Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TrueShares Technology AI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, TrueShares Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, WisdomTree International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TrueShares Technology and WisdomTree International

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

The idea behind TrueShares Technology AI and WisdomTree International Hedged 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.