Correlation Between WisdomTree and Cohen

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

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

Diversification Opportunities for WisdomTree and Cohen

0.88

Correlation Coefficient

WisdomTree  Cohen

Very poor diversification

The 3 months correlation between WisdomTree and Cohen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree and Cohen Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Company and WisdomTree 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 are associated (or correlated) with Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Company has no effect on the direction of WisdomTree i.e., WisdomTree and Cohen go up and down completely randomly.

Pair Corralation between WisdomTree and Cohen

Allowing for the 90-day total investment horizon WisdomTree is expected to under-perform the Cohen. But the stock apears to be less risky and, when comparing its historical volatility, WisdomTree is 1.25 times less risky than Cohen. The stock trades about -0.13 of its potential returns per unit of risk. The Cohen Company is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Cohen Company on December 26, 2024 and sell it today you would lose (89.00) from holding Cohen Company or give up 8.63% of portfolio value over 90 days.

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

WisdomTree  vs.  Cohen Company

WisdomTree

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cohen Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with WisdomTree and Cohen

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

The idea behind WisdomTree and Cohen Company 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.