Correlation Between ETF Series and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and WisdomTree International Multifactor, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and WisdomTree International.
Diversification Opportunities for ETF Series and WisdomTree International
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETF and WisdomTree is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and WisdomTree International Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and ETF Series 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 ETF Series Solutions 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 ETF Series i.e., ETF Series and WisdomTree International go up and down completely randomly.
Pair Corralation between ETF Series and WisdomTree International
Given the investment horizon of 90 days ETF Series Solutions is expected to under-perform the WisdomTree International. In addition to that, ETF Series is 1.89 times more volatile than WisdomTree International Multifactor. It trades about -0.04 of its total potential returns per unit of risk. WisdomTree International Multifactor is currently generating about 0.03 per unit of volatility. If you would invest 2,785 in WisdomTree International Multifactor on November 28, 2024 and sell it today you would earn a total of 59.00 from holding WisdomTree International Multifactor or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. WisdomTree International Multi
Performance |
| Timeline |
| ETF Series Solutions |
| WisdomTree International |
ETF Series and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and WisdomTree International
The main advantage of trading using opposite ETF Series and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. Distillate Fundamental Stability | ETF Series vs. ETF Series Solutions | ETF Series vs. Fairlead Tactical Sector | ETF Series vs. VanEck ETF Trust |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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