Correlation Between WisdomTree Interest and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Interest 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 Interest 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 Interest Rate and SPDR MSCI World, you can compare the effects of market volatilities on WisdomTree Interest 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 Interest with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Interest and SPDR MSCI.
Diversification Opportunities for WisdomTree Interest and SPDR MSCI
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and SPDR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Interest Rate and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World and WisdomTree Interest 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 Interest Rate 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 World has no effect on the direction of WisdomTree Interest i.e., WisdomTree Interest and SPDR MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Interest and SPDR MSCI
Given the investment horizon of 90 days WisdomTree Interest is expected to generate 2.72 times less return on investment than SPDR MSCI. But when comparing it to its historical volatility, WisdomTree Interest Rate is 2.49 times less risky than SPDR MSCI. It trades about 0.09 of its potential returns per unit of risk. SPDR MSCI World is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 11,754 in SPDR MSCI World on September 3, 2024 and sell it today you would earn a total of 1,262 from holding SPDR MSCI World or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Interest Rate vs. SPDR MSCI World
Performance |
| Timeline |
| WisdomTree Interest Rate |
| SPDR MSCI World |
WisdomTree Interest and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Interest and SPDR MSCI
The main advantage of trading using opposite WisdomTree Interest and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Interest 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 Interest Rate and SPDR MSCI World 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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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 Stocks Directory module to find actively traded stocks across global markets.
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