Correlation Between Xtrackers FTSE and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Xtrackers FTSE and WisdomTree Emerging 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 Xtrackers FTSE and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers FTSE Developed and WisdomTree Emerging Markets, you can compare the effects of market volatilities on Xtrackers FTSE and WisdomTree Emerging 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 Xtrackers FTSE with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers FTSE and WisdomTree Emerging.
Diversification Opportunities for Xtrackers FTSE and WisdomTree Emerging
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and WisdomTree is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers FTSE Developed and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and Xtrackers FTSE 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 Xtrackers FTSE Developed are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Xtrackers FTSE i.e., Xtrackers FTSE and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Xtrackers FTSE and WisdomTree Emerging
Given the investment horizon of 90 days Xtrackers FTSE is expected to generate 1.32 times less return on investment than WisdomTree Emerging. In addition to that, Xtrackers FTSE is 1.12 times more volatile than WisdomTree Emerging Markets. It trades about 0.06 of its total potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.08 per unit of volatility. If you would invest 2,046 in WisdomTree Emerging Markets on September 3, 2024 and sell it today you would earn a total of 665.00 from holding WisdomTree Emerging Markets or generate 32.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers FTSE Developed vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| Xtrackers FTSE Developed |
| WisdomTree Emerging |
Xtrackers FTSE and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers FTSE and WisdomTree Emerging
The main advantage of trading using opposite Xtrackers FTSE and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers FTSE position performs unexpectedly, WisdomTree Emerging 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 Emerging will offset losses from the drop in WisdomTree Emerging's long position.| Xtrackers FTSE vs. Xtrackers Russell Multifactor | Xtrackers FTSE vs. Xtrackers MSCI All | Xtrackers FTSE vs. WisdomTree Dynamic Currency | Xtrackers FTSE vs. Xtrackers MSCI Eurozone |
| WisdomTree Emerging vs. WisdomTree International Multifactor | WisdomTree Emerging vs. WisdomTree Europe Quality | WisdomTree Emerging vs. PIMCO RAFI Dynamic | WisdomTree Emerging vs. SPDR MSCI Emerging |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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