Correlation Between WisdomTree Global and Capital Group
Can any of the company-specific risk be diversified away by investing in both WisdomTree Global and Capital Group 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 Global and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Global ex US and Capital Group International, you can compare the effects of market volatilities on WisdomTree Global and Capital Group 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 Global with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Global and Capital Group.
Diversification Opportunities for WisdomTree Global and Capital Group
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Capital is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Global ex US and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and WisdomTree Global 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 Global ex US are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of WisdomTree Global i.e., WisdomTree Global and Capital Group go up and down completely randomly.
Pair Corralation between WisdomTree Global and Capital Group
Considering the 90-day investment horizon WisdomTree Global ex US is expected to under-perform the Capital Group. In addition to that, WisdomTree Global is 1.1 times more volatile than Capital Group International. It trades about -0.03 of its total potential returns per unit of risk. Capital Group International is currently generating about -0.01 per unit of volatility. If you would invest 2,906 in Capital Group International on September 1, 2024 and sell it today you would lose (51.00) from holding Capital Group International or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Global ex US vs. Capital Group International
Performance |
| Timeline |
| WisdomTree Global |
| Capital Group Intern |
WisdomTree Global and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Global and Capital Group
The main advantage of trading using opposite WisdomTree Global and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Global position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| WisdomTree Global vs. WisdomTree Global High | WisdomTree Global vs. WisdomTree International MidCap | WisdomTree Global vs. WisdomTree Japan SmallCap | WisdomTree Global vs. WisdomTree International High |
| Capital Group vs. Invesco SP International | Capital Group vs. Invesco SP International | Capital Group vs. Invesco FTSE RAFI | Capital Group vs. Invesco SP Emerging |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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