Correlation Between WisdomTree Aluminium and SPDR MSCI

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

By analyzing existing cross correlation between WisdomTree Aluminium 2x and SPDR MSCI Europe, you can compare the effects of market volatilities on WisdomTree Aluminium and SPDR MSCI 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 Aluminium with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Aluminium and SPDR MSCI.

Diversification Opportunities for WisdomTree Aluminium and SPDR MSCI

0.48

Correlation Coefficient

WisdomTree Aluminium  SPDR MSCI

Very weak diversification

The 3 months correlation between WisdomTree and SPDR is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Aluminium 2x and SPDR MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Europe and WisdomTree Aluminium 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 Aluminium 2x are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Europe has no effect on the direction of WisdomTree Aluminium i.e., WisdomTree Aluminium and SPDR MSCI go up and down completely randomly.

Pair Corralation between WisdomTree Aluminium and SPDR MSCI

Assuming the 90 days trading horizon WisdomTree Aluminium 2x is expected to generate 3.13 times more return on investment than SPDR MSCI. However, WisdomTree Aluminium is 3.13 times more volatile than SPDR MSCI Europe. It trades about 0.15 of its potential returns per unit of risk. SPDR MSCI Europe is currently generating about 0.19 per unit of risk. If you would invest  184.00  in WisdomTree Aluminium 2x on April 25, 2025 and sell it today you would earn a total of  33.00  from holding WisdomTree Aluminium 2x or generate 17.93% return on investment over 90 days.

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

WisdomTree Aluminium 2x  vs.  SPDR MSCI Europe

WisdomTree Aluminium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Aluminium 2x are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Aluminium unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPDR MSCI Europe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI Europe are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SPDR MSCI may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with WisdomTree Aluminium and SPDR MSCI

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

The idea behind WisdomTree Aluminium 2x and SPDR MSCI Europe 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.