Correlation Between WisdomTree New and Avantis Equity

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

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

Diversification Opportunities for WisdomTree New and Avantis Equity

-0.79

Correlation Coefficient

WisdomTree New  Avantis Equity

Pay attention - limited upside

The 3 months correlation between WisdomTree and Avantis is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree New Economy and Avantis Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Equity ETF and WisdomTree New 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 New Economy are associated (or correlated) with Avantis Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Equity ETF has no effect on the direction of WisdomTree New i.e., WisdomTree New and Avantis Equity go up and down completely randomly.

Pair Corralation between WisdomTree New and Avantis Equity

Given the investment horizon of 90 days WisdomTree New Economy is expected to under-perform the Avantis Equity. In addition to that, WisdomTree New is 1.09 times more volatile than Avantis Equity ETF. It trades about -0.2 of its total potential returns per unit of risk. Avantis Equity ETF is currently generating about 0.18 per unit of volatility. If you would invest  9,281  in Avantis Equity ETF on September 15, 2024 and sell it today you would earn a total of  777.00  from holding Avantis Equity ETF or generate 8.37% return on investment over 90 days.

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

WisdomTree New Economy  vs.  Avantis Equity ETF

WisdomTree New Economy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree New Economy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Avantis Equity ETF

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Equity ETF are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Avantis Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WisdomTree New and Avantis Equity

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

The idea behind WisdomTree New Economy and Avantis Equity ETF 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.