Correlation Between Dimensional International and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Dimensional International and WisdomTree International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and WisdomTree International Equity, you can compare the effects of market volatilities on Dimensional International and WisdomTree International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and WisdomTree International.
Diversification Opportunities for Dimensional International and WisdomTree International
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and WisdomTree International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 High are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Dimensional International i.e., Dimensional International and WisdomTree International go up and down completely randomly.
Pair Corralation between Dimensional International and WisdomTree International
Given the investment horizon of 90 days Dimensional International is expected to generate 1.07 times less return on investment than WisdomTree International. In addition to that, Dimensional International is 1.25 times more volatile than WisdomTree International Equity. It trades about 0.38 of its total potential returns per unit of risk. WisdomTree International Equity is currently generating about 0.51 per unit of volatility. If you would invest 6,834 in WisdomTree International Equity on October 21, 2025 and sell it today you would earn a total of 261.00 from holding WisdomTree International Equity or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Dimensional International High vs. WisdomTree International Equit
Performance |
| Timeline |
| Dimensional International |
| WisdomTree International |
Dimensional International and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and WisdomTree International
The main advantage of trading using opposite Dimensional International and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, WisdomTree International 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 International will offset losses from the drop in WisdomTree International's long position.The idea behind Dimensional International High and WisdomTree International Equity 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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