Correlation Between WisdomTree International and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree International and Global X 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 Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree International Equity and Global X MSCI, you can compare the effects of market volatilities on WisdomTree International and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Global X.
Diversification Opportunities for WisdomTree International and Global X
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Global is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Equit and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 Equity are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of WisdomTree International i.e., WisdomTree International and Global X go up and down completely randomly.
Pair Corralation between WisdomTree International and Global X
Considering the 90-day investment horizon WisdomTree International is expected to generate 1.23 times less return on investment than Global X. But when comparing it to its historical volatility, WisdomTree International Equity is 1.24 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X MSCI is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,054 in Global X MSCI on September 12, 2024 and sell it today you would earn a total of 450.00 from holding Global X MSCI or generate 21.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
WisdomTree International Equit vs. Global X MSCI
Performance |
| Timeline |
| WisdomTree International |
| Global X MSCI |
WisdomTree International and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree International and Global X
The main advantage of trading using opposite WisdomTree International and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| WisdomTree International vs. Global X MSCI | WisdomTree International vs. Global X Alternative | WisdomTree International vs. First Trust Intl | WisdomTree International vs. iShares AsiaPacific Dividend |
| Global X vs. Global X MSCI | Global X vs. Global X Alternative | Global X vs. iShares Emerging Markets | Global X vs. Global X SuperDividend |
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 CEOs Directory module to screen CEOs from public companies around the world.
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