Correlation Between IShares Core and WisdomTree Wheat

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

By analyzing existing cross correlation between iShares Core SP and WisdomTree Wheat 2x, you can compare the effects of market volatilities on IShares Core and WisdomTree Wheat 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 IShares Core with a short position of WisdomTree Wheat. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and WisdomTree Wheat.

Diversification Opportunities for IShares Core and WisdomTree Wheat

-0.79

Correlation Coefficient

IShares Core  WisdomTree Wheat

Pay attention - limited upside

The 3 months correlation between IShares and WisdomTree is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and WisdomTree Wheat 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Wheat and IShares Core 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 iShares Core SP are associated (or correlated) with WisdomTree Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Wheat has no effect on the direction of IShares Core i.e., IShares Core and WisdomTree Wheat go up and down completely randomly.

Pair Corralation between IShares Core and WisdomTree Wheat

Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.31 times more return on investment than WisdomTree Wheat. However, iShares Core SP is 3.18 times less risky than WisdomTree Wheat. It trades about 0.2 of its potential returns per unit of risk. WisdomTree Wheat 2x is currently generating about -0.08 per unit of risk. If you would invest  54,208  in iShares Core SP on September 23, 2024 and sell it today you would earn a total of  6,354  from holding iShares Core SP or generate 11.72% return on investment over 90 days.

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

iShares Core SP  vs.  WisdomTree Wheat 2x

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WisdomTree Wheat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Wheat 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's forward-looking indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with IShares Core and WisdomTree Wheat

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

The idea behind iShares Core SP and WisdomTree Wheat 2x 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.