Correlation Between WisdomTree China and WisdomTree Global
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and WisdomTree Global 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 WisdomTree Global 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 WisdomTree Global ex US, you can compare the effects of market volatilities on WisdomTree China and WisdomTree Global 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 WisdomTree Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and WisdomTree Global.
Diversification Opportunities for WisdomTree China and WisdomTree Global
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and WisdomTree Global ex US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global 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 WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global has no effect on the direction of WisdomTree China i.e., WisdomTree China and WisdomTree Global go up and down completely randomly.
Pair Corralation between WisdomTree China and WisdomTree Global
Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to under-perform the WisdomTree Global. In addition to that, WisdomTree China is 1.33 times more volatile than WisdomTree Global ex US. It trades about -0.02 of its total potential returns per unit of risk. WisdomTree Global ex US is currently generating about 0.11 per unit of volatility. If you would invest 4,105 in WisdomTree Global ex US on October 23, 2025 and sell it today you would earn a total of 232.00 from holding WisdomTree Global ex US or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree China ex State Owne vs. WisdomTree Global ex US
Performance |
| Timeline |
| WisdomTree China |
| WisdomTree Global |
WisdomTree China and WisdomTree Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree China and WisdomTree Global
The main advantage of trading using opposite WisdomTree China and WisdomTree Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, WisdomTree Global 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 Global will offset losses from the drop in WisdomTree Global's long position.| WisdomTree China vs. WisdomTree International Equity | WisdomTree China vs. iShares Morningstar Small Cap | WisdomTree China vs. WisdomTree SmallCap Earnings | WisdomTree China vs. Longview Advantage ETF |
| WisdomTree Global vs. WisdomTree International High | WisdomTree Global vs. iShares Global Comm | WisdomTree Global vs. FlexShares Quality Dividend | WisdomTree Global vs. WisdomTree China ex State Owned |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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