Correlation Between Wisdomtree Digital and Columbia Global

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

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

Diversification Opportunities for Wisdomtree Digital and Columbia Global

0.94

Correlation Coefficient

Wisdomtree Digital  Columbia Global

Almost no diversification

The 3 months correlation between Wisdomtree and Columbia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wisdomtree Digital Trust and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Wisdomtree Digital 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 Digital Trust are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Wisdomtree Digital i.e., Wisdomtree Digital and Columbia Global go up and down completely randomly.

Pair Corralation between Wisdomtree Digital and Columbia Global

Assuming the 90 days horizon Wisdomtree Digital Trust is expected to generate 0.6 times more return on investment than Columbia Global. However, Wisdomtree Digital Trust is 1.67 times less risky than Columbia Global. It trades about -0.09 of its potential returns per unit of risk. Columbia Global Technology is currently generating about -0.12 per unit of risk. If you would invest  1,544  in Wisdomtree Digital Trust on December 30, 2024 and sell it today you would lose (91.00) from holding Wisdomtree Digital Trust or give up 5.89% of portfolio value over 90 days.

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

Wisdomtree Digital Trust  vs.  Columbia Global Technology

Wisdomtree Digital Trust

Risk-Adjusted Performance

Very Weak

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

Columbia Global Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Global Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Wisdomtree Digital and Columbia Global

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

The idea behind Wisdomtree Digital Trust and Columbia Global Technology 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.