Correlation Between WisdomTree Managed and Vanguard Long

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

Diversification Opportunities for WisdomTree Managed and Vanguard Long

-0.76

Correlation Coefficient

WisdomTree Managed  Vanguard Long

Pay attention - limited upside

The 3 months correlation between WisdomTree and Vanguard is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and Vanguard Long Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Long Term 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 Vanguard Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Long Term has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and Vanguard Long go up and down completely randomly.

Pair Corralation between WisdomTree Managed and Vanguard Long

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to under-perform the Vanguard Long. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Managed Futures is 1.35 times less risky than Vanguard Long. The etf trades about -0.03 of its potential returns per unit of risk. The Vanguard Long Term Treasury is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,516  in Vanguard Long Term Treasury on December 30, 2024 and sell it today you would earn a total of  201.00  from holding Vanguard Long Term Treasury or generate 3.64% return on investment over 90 days.

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

WisdomTree Managed Futures  vs.  Vanguard Long Term Treasury

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.

Vanguard Long Term

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Long Term Treasury are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Vanguard Long is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Managed and Vanguard Long

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

The idea behind WisdomTree Managed Futures and Vanguard Long Term Treasury 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.