Correlation Between WisdomTree Artificial and LG Battery

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

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

Diversification Opportunities for WisdomTree Artificial and LG Battery

0.81

Correlation Coefficient

WisdomTree Artificial  LG Battery

Very poor diversification

The 3 months correlation between WisdomTree and BATE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Artificial Intellig and LG Battery Value Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Battery Value and WisdomTree Artificial 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 Artificial Intelligence are associated (or correlated) with LG Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Battery Value has no effect on the direction of WisdomTree Artificial i.e., WisdomTree Artificial and LG Battery go up and down completely randomly.

Pair Corralation between WisdomTree Artificial and LG Battery

Assuming the 90 days trading horizon WisdomTree Artificial Intelligence is expected to generate 1.16 times more return on investment than LG Battery. However, WisdomTree Artificial is 1.16 times more volatile than LG Battery Value Chain. It trades about 0.07 of its potential returns per unit of risk. LG Battery Value Chain is currently generating about 0.01 per unit of risk. If you would invest  4,332  in WisdomTree Artificial Intelligence on October 22, 2024 and sell it today you would earn a total of  2,512  from holding WisdomTree Artificial Intelligence or generate 57.99% return on investment over 90 days.

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

WisdomTree Artificial Intellig  vs.  LG Battery Value Chain

WisdomTree Artificial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Artificial Intelligence are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady forward indicators, WisdomTree Artificial reported solid returns over the last few months and may actually be approaching a breakup point.

LG Battery Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LG Battery Value Chain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, LG Battery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WisdomTree Artificial and LG Battery

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

The idea behind WisdomTree Artificial Intelligence and LG Battery Value Chain 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.