Correlation Between WisdomTree China and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and IShares 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 China and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree China ex State Owned and iShares MSCI China, you can compare the effects of market volatilities on WisdomTree China and IShares 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 China with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and IShares MSCI.
Diversification Opportunities for WisdomTree China and IShares MSCI
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and WisdomTree China 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 China ex State Owned are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of WisdomTree China i.e., WisdomTree China and IShares MSCI go up and down completely randomly.
Pair Corralation between WisdomTree China and IShares MSCI
Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree China ex State Owned is 1.01 times less risky than IShares MSCI. The etf trades about -0.18 of its potential returns per unit of risk. The iShares MSCI China is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,971 in iShares MSCI China on August 28, 2024 and sell it today you would lose (141.00) from holding iShares MSCI China or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree China ex State Owne vs. iShares MSCI China
Performance |
| Timeline |
| WisdomTree China |
| iShares MSCI China |
WisdomTree China and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree China and IShares MSCI
The main advantage of trading using opposite WisdomTree China and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| WisdomTree China vs. iShares MSCI Singapore | WisdomTree China vs. iShares MSCI Malaysia | WisdomTree China vs. iShares MSCI Australia | WisdomTree China vs. iShares MSCI South |
| IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Malaysia | IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI South |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |