Correlation Between WisdomTree Trust and Retireful

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

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

Diversification Opportunities for WisdomTree Trust and Retireful

-0.21

Correlation Coefficient

WisdomTree Trust  Retireful

Very good diversification

The 3 months correlation between WisdomTree and Retireful is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and Retireful in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retireful 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 Retireful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retireful has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and Retireful go up and down completely randomly.

Pair Corralation between WisdomTree Trust and Retireful

Given the investment horizon of 90 days WisdomTree Trust is expected to under-perform the Retireful. In addition to that, WisdomTree Trust is 35.07 times more volatile than Retireful. It trades about -0.04 of its total potential returns per unit of risk. Retireful is currently generating about 0.41 per unit of volatility. If you would invest  2,166  in Retireful on September 26, 2024 and sell it today you would earn a total of  1.00  from holding Retireful or generate 0.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.52%
Values	Daily Returns

WisdomTree Trust   vs.  Retireful

WisdomTree Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, WisdomTree Trust is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Retireful

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Retireful has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Retireful is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WisdomTree Trust and Retireful

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

The idea behind WisdomTree Trust and Retireful 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.