Correlation Between CapitaLand Investment and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both CapitaLand Investment and WisdomTree Investments 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 CapitaLand Investment and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CapitaLand Investment Limited and WisdomTree Investments, you can compare the effects of market volatilities on CapitaLand Investment and WisdomTree Investments 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 CapitaLand Investment with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CapitaLand Investment and WisdomTree Investments.
Diversification Opportunities for CapitaLand Investment and WisdomTree Investments
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CapitaLand and WisdomTree is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CapitaLand Investment Limited and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and CapitaLand Investment 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 CapitaLand Investment Limited are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of CapitaLand Investment i.e., CapitaLand Investment and WisdomTree Investments go up and down completely randomly.
Pair Corralation between CapitaLand Investment and WisdomTree Investments
Assuming the 90 days horizon CapitaLand Investment is expected to generate 4.67 times less return on investment than WisdomTree Investments. But when comparing it to its historical volatility, CapitaLand Investment Limited is 1.18 times less risky than WisdomTree Investments. It trades about 0.08 of its potential returns per unit of risk. WisdomTree Investments is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 693.00 in WisdomTree Investments on April 20, 2025 and sell it today you would earn a total of 389.00 from holding WisdomTree Investments or generate 56.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CapitaLand Investment Limited vs. WisdomTree Investments
Performance |
Timeline |
CapitaLand Investment |
WisdomTree Investments |
CapitaLand Investment and WisdomTree Investments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CapitaLand Investment and WisdomTree Investments
The main advantage of trading using opposite CapitaLand Investment and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CapitaLand Investment position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.CapitaLand Investment vs. Sumitomo Chemical | CapitaLand Investment vs. Strong Petrochemical Holdings | CapitaLand Investment vs. EBRO FOODS | CapitaLand Investment vs. Silicon Motion Technology |
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Check out your portfolio center.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.
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