Correlation Between WisdomTree International and WisdomTree Dynamic
Can any of the company-specific risk be diversified away by investing in both WisdomTree International and WisdomTree Dynamic 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 International and WisdomTree Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree International High and WisdomTree Dynamic Currency, you can compare the effects of market volatilities on WisdomTree International and WisdomTree Dynamic 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 International with a short position of WisdomTree Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and WisdomTree Dynamic.
Diversification Opportunities for WisdomTree International and WisdomTree Dynamic
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International High and WisdomTree Dynamic Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Dynamic and WisdomTree 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 WisdomTree International High are associated (or correlated) with WisdomTree Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Dynamic has no effect on the direction of WisdomTree International i.e., WisdomTree International and WisdomTree Dynamic go up and down completely randomly.
Pair Corralation between WisdomTree International and WisdomTree Dynamic
Considering the 90-day investment horizon WisdomTree International High is expected to generate 0.92 times more return on investment than WisdomTree Dynamic. However, WisdomTree International High is 1.08 times less risky than WisdomTree Dynamic. It trades about 0.25 of its potential returns per unit of risk. WisdomTree Dynamic Currency is currently generating about 0.18 per unit of risk. If you would invest 4,889 in WisdomTree International High on October 25, 2025 and sell it today you would earn a total of 443.00 from holding WisdomTree International High or generate 9.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree International High vs. WisdomTree Dynamic Currency
Performance |
| Timeline |
| WisdomTree International |
| WisdomTree Dynamic |
WisdomTree International and WisdomTree Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree International and WisdomTree Dynamic
The main advantage of trading using opposite WisdomTree International and WisdomTree Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, WisdomTree Dynamic 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 Dynamic will offset losses from the drop in WisdomTree Dynamic's long position.The idea behind WisdomTree International High and WisdomTree Dynamic Currency 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.
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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