Correlation Between WisdomTree Emerging and ProShares MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and ProShares 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 Emerging and ProShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Emerging Markets and ProShares MSCI Europe, you can compare the effects of market volatilities on WisdomTree Emerging and ProShares 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 Emerging with a short position of ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and ProShares MSCI.
Diversification Opportunities for WisdomTree Emerging and ProShares MSCI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and ProShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and ProShares MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Europe and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Europe has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and ProShares MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and ProShares MSCI
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to generate 0.96 times more return on investment than ProShares MSCI. However, WisdomTree Emerging Markets is 1.04 times less risky than ProShares MSCI. It trades about -0.14 of its potential returns per unit of risk. ProShares MSCI Europe is currently generating about -0.23 per unit of risk. If you would invest 2,666 in WisdomTree Emerging Markets on August 28, 2024 and sell it today you would lose (67.00) from holding WisdomTree Emerging Markets or give up 2.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. ProShares MSCI Europe
Performance |
| Timeline |
| WisdomTree Emerging |
| ProShares MSCI Europe |
WisdomTree Emerging and ProShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and ProShares MSCI
The main advantage of trading using opposite WisdomTree Emerging and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, ProShares 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 ProShares MSCI will offset losses from the drop in ProShares MSCI's long position.| WisdomTree Emerging vs. WisdomTree SmallCap Quality | WisdomTree Emerging vs. WisdomTree Japan Hedged | WisdomTree Emerging vs. WisdomTree Interest Rate | WisdomTree Emerging vs. WisdomTree Emerging Markets |
| ProShares MSCI vs. ProShares MSCI EAFE | ProShares MSCI vs. ProShares MSCI Emerging | ProShares MSCI vs. ProShares SP MidCap | ProShares MSCI vs. ProShares Russell 2000 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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