Correlation Between LAir Liquide and WisdomTree Investments

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Can any of the company-specific risk be diversified away by investing in both LAir Liquide 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 LAir Liquide and WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAir Liquide SA and WisdomTree Investments, you can compare the effects of market volatilities on LAir Liquide 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 LAir Liquide with a short position of WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAir Liquide and WisdomTree Investments.

Diversification Opportunities for LAir Liquide and WisdomTree Investments

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between LAir and WisdomTree is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding LAir Liquide SA and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and LAir Liquide 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 LAir Liquide SA 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 LAir Liquide i.e., LAir Liquide and WisdomTree Investments go up and down completely randomly.

Pair Corralation between LAir Liquide and WisdomTree Investments

Assuming the 90 days trading horizon LAir Liquide is expected to generate 188.38 times less return on investment than WisdomTree Investments. But when comparing it to its historical volatility, LAir Liquide SA is 2.52 times less risky than WisdomTree Investments. It trades about 0.0 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

LAir Liquide SA  vs.  WisdomTree Investments

 Performance 
       Timeline  
LAir Liquide SA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days LAir Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LAir Liquide is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
WisdomTree Investments 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Investments are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WisdomTree Investments reported solid returns over the last few months and may actually be approaching a breakup point.

LAir Liquide and WisdomTree Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LAir Liquide and WisdomTree Investments

The main advantage of trading using opposite LAir Liquide and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAir Liquide 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.
The idea behind LAir Liquide SA and WisdomTree Investments 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.

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