Correlation Between Dimensional International and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both Dimensional International and WisdomTree Europe 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 Dimensional International and WisdomTree Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International Value and WisdomTree Europe SmallCap, you can compare the effects of market volatilities on Dimensional International and WisdomTree Europe 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 Dimensional International with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and WisdomTree Europe.
Diversification Opportunities for Dimensional International and WisdomTree Europe
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and WisdomTree is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International Valu and WisdomTree Europe SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe and Dimensional International 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 Dimensional International Value are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe has no effect on the direction of Dimensional International i.e., Dimensional International and WisdomTree Europe go up and down completely randomly.
Pair Corralation between Dimensional International and WisdomTree Europe
Given the investment horizon of 90 days Dimensional International Value is expected to generate 1.01 times more return on investment than WisdomTree Europe. However, Dimensional International is 1.01 times more volatile than WisdomTree Europe SmallCap. It trades about 0.36 of its potential returns per unit of risk. WisdomTree Europe SmallCap is currently generating about 0.27 per unit of risk. If you would invest 4,785 in Dimensional International Value on November 30, 2025 and sell it today you would earn a total of 820.00 from holding Dimensional International Value or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International Valu vs. WisdomTree Europe SmallCap
Performance |
| Timeline |
| Dimensional International |
| WisdomTree Europe |
Dimensional International and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and WisdomTree Europe
The main advantage of trading using opposite Dimensional International and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.The idea behind Dimensional International Value and WisdomTree Europe SmallCap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| WisdomTree Europe vs. WisdomTree International MidCap | WisdomTree Europe vs. iShares MSCI Turkey | WisdomTree Europe vs. iShares Currency Hedged | WisdomTree Europe vs. iShares MSCI Japan |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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