Correlation Between WisdomTree Global and Vanguard International
Can any of the company-specific risk be diversified away by investing in both WisdomTree Global and Vanguard 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 WisdomTree Global and Vanguard International 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 Vanguard International Dividend, you can compare the effects of market volatilities on WisdomTree Global and Vanguard 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 WisdomTree Global with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Global and Vanguard International.
Diversification Opportunities for WisdomTree Global and Vanguard International
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Global ex US and Vanguard International Dividen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International 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 Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of WisdomTree Global i.e., WisdomTree Global and Vanguard International go up and down completely randomly.
Pair Corralation between WisdomTree Global and Vanguard International
Considering the 90-day investment horizon WisdomTree Global ex US is expected to under-perform the Vanguard International. In addition to that, WisdomTree Global is 1.23 times more volatile than Vanguard International Dividend. It trades about -0.16 of its total potential returns per unit of risk. Vanguard International Dividend is currently generating about -0.18 per unit of volatility. If you would invest 8,496 in Vanguard International Dividend on August 26, 2024 and sell it today you would lose (238.00) from holding Vanguard International Dividend or give up 2.8% 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. Vanguard International Dividen
Performance |
| Timeline |
| WisdomTree Global |
| Vanguard International |
WisdomTree Global and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Global and Vanguard International
The main advantage of trading using opposite WisdomTree Global and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Global position performs unexpectedly, Vanguard 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| WisdomTree Global vs. iShares MSCI Intl | WisdomTree Global vs. iShares Edge MSCI | WisdomTree Global vs. iShares MSCI Emerging | WisdomTree Global vs. iShares MSCI Intl |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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