Correlation Between WisdomTree LargeCap and WisdomTree Asia
Can any of the company-specific risk be diversified away by investing in both WisdomTree LargeCap and WisdomTree Asia 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 LargeCap and WisdomTree Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree LargeCap Dividend and WisdomTree Asia Defense, you can compare the effects of market volatilities on WisdomTree LargeCap and WisdomTree Asia 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 LargeCap with a short position of WisdomTree Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree LargeCap and WisdomTree Asia.
Diversification Opportunities for WisdomTree LargeCap and WisdomTree Asia
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree LargeCap Dividend and WisdomTree Asia Defense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Asia Defense and WisdomTree LargeCap 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 LargeCap Dividend are associated (or correlated) with WisdomTree Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Asia Defense has no effect on the direction of WisdomTree LargeCap i.e., WisdomTree LargeCap and WisdomTree Asia go up and down completely randomly.
Pair Corralation between WisdomTree LargeCap and WisdomTree Asia
Considering the 90-day investment horizon WisdomTree LargeCap is expected to generate 1.32 times less return on investment than WisdomTree Asia. But when comparing it to its historical volatility, WisdomTree LargeCap Dividend is 2.73 times less risky than WisdomTree Asia. It trades about 0.21 of its potential returns per unit of risk. WisdomTree Asia Defense is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,979 in WisdomTree Asia Defense on November 10, 2025 and sell it today you would earn a total of 282.00 from holding WisdomTree Asia Defense or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree LargeCap Dividend vs. WisdomTree Asia Defense
Performance |
| Timeline |
| WisdomTree LargeCap |
| WisdomTree Asia Defense |
WisdomTree LargeCap and WisdomTree Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree LargeCap and WisdomTree Asia
The main advantage of trading using opposite WisdomTree LargeCap and WisdomTree Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree LargeCap position performs unexpectedly, WisdomTree Asia 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 Asia will offset losses from the drop in WisdomTree Asia's long position.| WisdomTree LargeCap vs. WisdomTree MidCap Dividend | WisdomTree LargeCap vs. iShares MSCI EAFE | WisdomTree LargeCap vs. iShares ESG Aware | WisdomTree LargeCap vs. iShares MSCI Taiwan |
| WisdomTree Asia vs. Telecommunications Fund Investor | WisdomTree Asia vs. iShares Trust | WisdomTree Asia vs. Jacob Small Cap | WisdomTree Asia vs. Cullen Small Cap |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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