Correlation Between KGHM Polska and WisdomTree Investments

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

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

Diversification Opportunities for KGHM Polska and WisdomTree Investments

0.79

Correlation Coefficient

KGHM Polska  WisdomTree Investments

Poor diversification

The 3 months correlation between KGHM and WisdomTree is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KGHM Polska Miedz and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments and KGHM Polska 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 KGHM Polska Miedz 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 KGHM Polska i.e., KGHM Polska and WisdomTree Investments go up and down completely randomly.

Pair Corralation between KGHM Polska and WisdomTree Investments

Assuming the 90 days trading horizon KGHM Polska is expected to generate 4.68 times less return on investment than WisdomTree Investments. In addition to that, KGHM Polska is 1.05 times more volatile than WisdomTree Investments. It trades about 0.06 of its total potential returns per unit of risk. WisdomTree Investments is currently generating about 0.32 per unit of volatility. If you would invest  738.00  in WisdomTree Investments on April 23, 2025 and sell it today you would earn a total of  386.00  from holding WisdomTree Investments or generate 52.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

KGHM Polska Miedz  vs.  WisdomTree Investments

KGHM Polska Miedz

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KGHM Polska Miedz are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, KGHM Polska may actually be approaching a critical reversion point that can send shares even higher in August 2025.

WisdomTree Investments

Risk-Adjusted Performance

Solid

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.

Pair Trading with KGHM Polska and WisdomTree Investments

The main advantage of trading using opposite KGHM Polska and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KGHM Polska 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 KGHM Polska Miedz 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.