Correlation Between WisdomTree Managed and KraneShares Global

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

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

Diversification Opportunities for WisdomTree Managed and KraneShares Global

-0.28

Correlation Coefficient

WisdomTree Managed  KraneShares Global

Very good diversification

The 3 months correlation between WisdomTree and KraneShares is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and KraneShares Global Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Global Carbon and WisdomTree Managed 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 Managed Futures are associated (or correlated) with KraneShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Global Carbon has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and KraneShares Global go up and down completely randomly.

Pair Corralation between WisdomTree Managed and KraneShares Global

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to under-perform the KraneShares Global. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Managed Futures is 2.4 times less risky than KraneShares Global. The etf trades about -0.21 of its potential returns per unit of risk. The KraneShares Global Carbon is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,817  in KraneShares Global Carbon on October 9, 2024 and sell it today you would earn a total of  143.00  from holding KraneShares Global Carbon or generate 5.08% return on investment over 90 days.

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

WisdomTree Managed Futures  vs.  KraneShares Global Carbon

WisdomTree Managed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KraneShares Global Carbon

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KraneShares Global Carbon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, KraneShares Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree Managed and KraneShares Global

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

The idea behind WisdomTree Managed Futures and KraneShares Global Carbon 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.