Correlation Between WisdomTree Trust and IQ Global

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

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

Diversification Opportunities for WisdomTree Trust and IQ Global

0.32

Correlation Coefficient

WisdomTree Trust  IQ Global

Weak diversification

The 3 months correlation between WisdomTree and WRND is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and IQ Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Global Equity and WisdomTree Trust 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 Trust are associated (or correlated) with IQ Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Global Equity has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and IQ Global go up and down completely randomly.

Pair Corralation between WisdomTree Trust and IQ Global

Considering the 90-day investment horizon WisdomTree Trust is expected to under-perform the IQ Global. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Trust is 1.05 times less risky than IQ Global. The etf trades about -0.03 of its potential returns per unit of risk. The IQ Global Equity is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,955  in IQ Global Equity on December 29, 2024 and sell it today you would earn a total of  23.00  from holding IQ Global Equity or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

WisdomTree Trust   vs.  IQ Global Equity

WisdomTree Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, WisdomTree Trust is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IQ Global Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Global Equity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IQ Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree Trust and IQ Global

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

The idea behind WisdomTree Trust and IQ Global Equity 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.