Correlation Between Nasdaq and Wisdomtree Digital

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

By analyzing existing cross correlation between Nasdaq Inc and Wisdomtree Digital Trust, you can compare the effects of market volatilities on Nasdaq and Wisdomtree Digital 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 Nasdaq with a short position of Wisdomtree Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Wisdomtree Digital.

Diversification Opportunities for Nasdaq and Wisdomtree Digital

-0.09

Correlation Coefficient

Nasdaq  Wisdomtree Digital

Good diversification

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

Pair Corralation between Nasdaq and Wisdomtree Digital

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Wisdomtree Digital. In addition to that, Nasdaq is 1.8 times more volatile than Wisdomtree Digital Trust. It trades about -0.03 of its total potential returns per unit of risk. Wisdomtree Digital Trust is currently generating about 0.06 per unit of volatility. If you would invest  810.00  in Wisdomtree Digital Trust on December 29, 2024 and sell it today you would earn a total of  21.00  from holding Wisdomtree Digital Trust or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nasdaq Inc  vs.  Wisdomtree Digital Trust

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

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

Wisdomtree Digital Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wisdomtree Digital Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Wisdomtree Digital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Wisdomtree Digital

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

The idea behind Nasdaq Inc and Wisdomtree Digital Trust 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.