Correlation Between WisdomTree China and IShares China
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and IShares China 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 China 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 China Large Cap, you can compare the effects of market volatilities on WisdomTree China and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and IShares China.
Diversification Opportunities for WisdomTree China and IShares China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between WisdomTree and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and iShares China Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large 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 China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of WisdomTree China i.e., WisdomTree China and IShares China go up and down completely randomly.
Pair Corralation between WisdomTree China and IShares China
Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to under-perform the IShares China. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree China ex State Owned is 1.0 times less risky than IShares China. The etf trades about 0.0 of its potential returns per unit of risk. The iShares China Large Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,726 in iShares China Large Cap on August 27, 2024 and sell it today you would earn a total of 243.00 from holding iShares China Large Cap or generate 8.91% return on investment 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 China Large Cap
Performance |
| Timeline |
| WisdomTree China |
| iShares China Large |
WisdomTree China and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree China and IShares China
The main advantage of trading using opposite WisdomTree China and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, IShares China 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 China will offset losses from the drop in IShares China'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 China vs. iShares MSCI Brazil | IShares China vs. iShares MSCI Emerging | IShares China vs. iShares MSCI Japan | IShares China vs. iShares MSCI Hong |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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