Correlation Between IShares Global and WisdomTree Physical
Can any of the company-specific risk be diversified away by investing in both IShares Global and WisdomTree Physical 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 IShares Global and WisdomTree Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Aggregate and WisdomTree Physical Gold, you can compare the effects of market volatilities on IShares Global and WisdomTree Physical 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 IShares Global with a short position of WisdomTree Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and WisdomTree Physical.
Diversification Opportunities for IShares Global and WisdomTree Physical
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and WisdomTree is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Aggregate and WisdomTree Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Physical Gold and IShares Global 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 iShares Global Aggregate are associated (or correlated) with WisdomTree Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Physical Gold has no effect on the direction of IShares Global i.e., IShares Global and WisdomTree Physical go up and down completely randomly.
Pair Corralation between IShares Global and WisdomTree Physical
Assuming the 90 days trading horizon iShares Global Aggregate is expected to under-perform the WisdomTree Physical. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Aggregate is 5.15 times less risky than WisdomTree Physical. The etf trades about -0.26 of its potential returns per unit of risk. The WisdomTree Physical Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 23,498 in WisdomTree Physical Gold on August 24, 2024 and sell it today you would earn a total of 221.00 from holding WisdomTree Physical Gold or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Global Aggregate vs. WisdomTree Physical Gold
Performance |
| Timeline |
| iShares Global Aggregate |
| WisdomTree Physical Gold |
IShares Global and WisdomTree Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Global and WisdomTree Physical
The main advantage of trading using opposite IShares Global and WisdomTree Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, WisdomTree Physical 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 Physical will offset losses from the drop in WisdomTree Physical's long position.| IShares Global vs. iShares III Public | IShares Global vs. iShares Core MSCI | IShares Global vs. iShares France Govt | IShares Global vs. iShares Edge MSCI |
| WisdomTree Physical vs. Vanguard SP 500 | WisdomTree Physical vs. SPDR Dow Jones | WisdomTree Physical vs. iShares Core MSCI | WisdomTree Physical vs. iShares SP 500 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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