Correlation Between WisdomTree Emerging and SSGA Active
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and SSGA Active 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 SSGA Active 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 SSGA Active Trust, you can compare the effects of market volatilities on WisdomTree Emerging and SSGA Active 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 SSGA Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and SSGA Active.
Diversification Opportunities for WisdomTree Emerging and SSGA Active
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and SSGA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and SSGA Active Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSGA Active Trust 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 SSGA Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSGA Active Trust has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and SSGA Active go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and SSGA Active
Given the investment horizon of 90 days WisdomTree Emerging is expected to generate 1.69 times less return on investment than SSGA Active. In addition to that, WisdomTree Emerging is 5.07 times more volatile than SSGA Active Trust. It trades about 0.02 of its total potential returns per unit of risk. SSGA Active Trust is currently generating about 0.18 per unit of volatility. If you would invest 2,489 in SSGA Active Trust on August 29, 2024 and sell it today you would earn a total of 125.00 from holding SSGA Active Trust or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. SSGA Active Trust
Performance |
| Timeline |
| WisdomTree Emerging |
| SSGA Active Trust |
WisdomTree Emerging and SSGA Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and SSGA Active
The main advantage of trading using opposite WisdomTree Emerging and SSGA Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, SSGA Active 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 SSGA Active will offset losses from the drop in SSGA Active'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 |
| SSGA Active vs. WisdomTree Interest Rate | SSGA Active vs. WisdomTree SmallCap Quality | SSGA Active vs. WisdomTree Emerging Markets | SSGA Active vs. WisdomTree Emerging Markets |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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