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 Taiwan, 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
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and iShares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Taiwan 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 Taiwan 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 1.05 times less risky than IShares MSCI. The etf trades about -0.05 of its potential returns per unit of risk. The iShares MSCI Taiwan is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,319 in iShares MSCI Taiwan on October 23, 2024 and sell it today you would lose (8.00) from holding iShares MSCI Taiwan or give up 0.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree China ex State Owne vs. iShares MSCI Taiwan
Performance |
| Timeline |
| WisdomTree China |
| iShares MSCI Taiwan |
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. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Malaysia |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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