Correlation Between WisdomTree International and Themes Cybersecurity

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

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

Diversification Opportunities for WisdomTree International and Themes Cybersecurity

-0.57

Correlation Coefficient

WisdomTree International  Themes Cybersecurity

Excellent diversification

The 3 months correlation between WisdomTree and Themes is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Al and Themes Cybersecurity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Cybersecurity ETF and WisdomTree International 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 International Al are associated (or correlated) with Themes Cybersecurity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Cybersecurity ETF has no effect on the direction of WisdomTree International i.e., WisdomTree International and Themes Cybersecurity go up and down completely randomly.

Pair Corralation between WisdomTree International and Themes Cybersecurity

Given the investment horizon of 90 days WisdomTree International Al is expected to under-perform the Themes Cybersecurity. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree International Al is 1.5 times less risky than Themes Cybersecurity. The etf trades about -0.06 of its potential returns per unit of risk. The Themes Cybersecurity ETF is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,796  in Themes Cybersecurity ETF on September 2, 2024 and sell it today you would earn a total of  249.00  from holding Themes Cybersecurity ETF or generate 8.91% return on investment over 90 days.

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

WisdomTree International Al  vs.  Themes Cybersecurity ETF

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International Al has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Themes Cybersecurity ETF

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Themes Cybersecurity ETF are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Themes Cybersecurity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with WisdomTree International and Themes Cybersecurity

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

The idea behind WisdomTree International Al and Themes Cybersecurity 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.