Correlation Between WisdomTree SmallCap and DXGE
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and DXGE 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 SmallCap and DXGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Quality and DXGE, you can compare the effects of market volatilities on WisdomTree SmallCap and DXGE 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 SmallCap with a short position of DXGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and DXGE.
Diversification Opportunities for WisdomTree SmallCap and DXGE
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and DXGE is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Quality and DXGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXGE and WisdomTree SmallCap 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 SmallCap Quality are associated (or correlated) with DXGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXGE has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and DXGE go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and DXGE
If you would invest 5,038 in WisdomTree SmallCap Quality on September 1, 2024 and sell it today you would earn a total of 563.00 from holding WisdomTree SmallCap Quality or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
WisdomTree SmallCap Quality vs. DXGE
Performance |
| Timeline |
| WisdomTree SmallCap |
| DXGE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WisdomTree SmallCap and DXGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and DXGE
The main advantage of trading using opposite WisdomTree SmallCap and DXGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, DXGE 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 DXGE will offset losses from the drop in DXGE's long position.| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Interest Rate | WisdomTree SmallCap vs. WisdomTree Japan Hedged | WisdomTree SmallCap vs. WisdomTree Interest Rate |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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