Correlation Between WisdomTree Managed and MFUT

Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and MFUT 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 MFUT 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 MFUT, you can compare the effects of market volatilities on WisdomTree Managed and MFUT 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 MFUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and MFUT.

Diversification Opportunities for WisdomTree Managed and MFUT

0.69

Correlation Coefficient

WisdomTree Managed  MFUT

Poor diversification

The 3 months correlation between WisdomTree and MFUT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and MFUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFUT 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 MFUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFUT has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and MFUT go up and down completely randomly.

Pair Corralation between WisdomTree Managed and MFUT

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to generate 0.94 times more return on investment than MFUT. However, WisdomTree Managed Futures is 1.07 times less risky than MFUT. It trades about -0.07 of its potential returns per unit of risk. MFUT is currently generating about -0.18 per unit of risk. If you would invest  3,559  in WisdomTree Managed Futures on December 2, 2024 and sell it today you would lose (86.00) from holding WisdomTree Managed Futures or give up 2.42% of portfolio value over 90 days.

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

WisdomTree Managed Futures  vs.  MFUT

WisdomTree Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Managed Futures has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

MFUT

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFUT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with WisdomTree Managed and MFUT

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

The idea behind WisdomTree Managed Futures and MFUT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.