Correlation Between Affinity World and WisdomTree Global

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

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

Diversification Opportunities for Affinity World and WisdomTree Global

0.0

Correlation Coefficient

Affinity World  WisdomTree Global

Pay attention - limited upside

The 3 months correlation between Affinity and WisdomTree is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Affinity World Leaders and WisdomTree Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global High and Affinity World 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 Affinity World Leaders are associated (or correlated) with WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global High has no effect on the direction of Affinity World i.e., Affinity World and WisdomTree Global go up and down completely randomly.

Pair Corralation between Affinity World and WisdomTree Global

Given the investment horizon of 90 days Affinity World Leaders is expected to under-perform the WisdomTree Global. In addition to that, Affinity World is 1.51 times more volatile than WisdomTree Global High. It trades about -0.03 of its total potential returns per unit of risk. WisdomTree Global High is currently generating about 0.19 per unit of volatility. If you would invest  5,187  in WisdomTree Global High on December 30, 2024 and sell it today you would earn a total of  393.00  from holding WisdomTree Global High or generate 7.58% return on investment over 90 days.

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

Affinity World Leaders  vs.  WisdomTree Global High

Affinity World Leaders

Risk-Adjusted Performance

Very Weak

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

WisdomTree Global High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Global High are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, WisdomTree Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Affinity World and WisdomTree Global

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

The idea behind Affinity World Leaders and WisdomTree Global High 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.