Correlation Between IShares Core and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both IShares Core and WisdomTree Japan 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 Core and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Aggressive and WisdomTree Japan Hedged, you can compare the effects of market volatilities on IShares Core and WisdomTree Japan 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 Core with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and WisdomTree Japan.
Diversification Opportunities for IShares Core and WisdomTree Japan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and WisdomTree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Aggressive and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged and IShares Core 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 Core Aggressive are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of IShares Core i.e., IShares Core and WisdomTree Japan go up and down completely randomly.
Pair Corralation between IShares Core and WisdomTree Japan
Considering the 90-day investment horizon IShares Core is expected to generate 1.97 times less return on investment than WisdomTree Japan. But when comparing it to its historical volatility, iShares Core Aggressive is 1.82 times less risky than WisdomTree Japan. It trades about 0.04 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,391 in WisdomTree Japan Hedged on January 12, 2025 and sell it today you would earn a total of 1,596 from holding WisdomTree Japan Hedged or generate 19.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Aggressive vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| iShares Core Aggressive |
| WisdomTree Japan Hedged |
IShares Core and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and WisdomTree Japan
The main advantage of trading using opposite IShares Core and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan's long position.| IShares Core vs. iShares Core Growth | IShares Core vs. iShares Core Moderate | IShares Core vs. iShares Core Conservative | IShares Core vs. iShares Core Total |
| WisdomTree Japan vs. WisdomTree Europe Hedged | WisdomTree Japan vs. WisdomTree Japan SmallCap | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. iShares MSCI Japan |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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