Correlation Between WisdomTree Continuous and Merrill Lynch

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

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

Diversification Opportunities for WisdomTree Continuous and Merrill Lynch

0.0

Correlation Coefficient

WisdomTree Continuous  Merrill Lynch

Pay attention - limited upside

The 3 months correlation between WisdomTree and Merrill is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Continuous Commodit and Merrill Lynch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merrill Lynch and WisdomTree Continuous 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 Continuous Commodity are associated (or correlated) with Merrill Lynch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merrill Lynch has no effect on the direction of WisdomTree Continuous i.e., WisdomTree Continuous and Merrill Lynch go up and down completely randomly.

Pair Corralation between WisdomTree Continuous and Merrill Lynch

If you would invest (100.00) in Merrill Lynch on June 29, 2024 and sell it today you would earn a total of  100.00  from holding Merrill Lynch or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WisdomTree Continuous Commodit  vs.  Merrill Lynch

WisdomTree Continuous

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days WisdomTree Continuous Commodity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, WisdomTree Continuous is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Merrill Lynch

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merrill Lynch has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, Merrill Lynch is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with WisdomTree Continuous and Merrill Lynch

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

The idea behind WisdomTree Continuous Commodity and Merrill Lynch 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.