Correlation Between WisdomTree International and Relative Sentiment
Can any of the company-specific risk be diversified away by investing in both WisdomTree International and Relative Sentiment 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 Relative Sentiment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree International Multifactor and Relative Sentiment Tactical, you can compare the effects of market volatilities on WisdomTree International and Relative Sentiment 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 Relative Sentiment. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Relative Sentiment.
Diversification Opportunities for WisdomTree International and Relative Sentiment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Relative is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Multi and Relative Sentiment Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relative Sentiment 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 Multifactor are associated (or correlated) with Relative Sentiment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relative Sentiment has no effect on the direction of WisdomTree International i.e., WisdomTree International and Relative Sentiment go up and down completely randomly.
Pair Corralation between WisdomTree International and Relative Sentiment
Given the investment horizon of 90 days WisdomTree International is expected to generate 1.35 times less return on investment than Relative Sentiment. But when comparing it to its historical volatility, WisdomTree International Multifactor is 2.13 times less risky than Relative Sentiment. It trades about 0.19 of its potential returns per unit of risk. Relative Sentiment Tactical is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,713 in Relative Sentiment Tactical on November 8, 2025 and sell it today you would earn a total of 345.00 from holding Relative Sentiment Tactical or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.36% |
| Values | Daily Returns |
WisdomTree International Multi vs. Relative Sentiment Tactical
Performance |
| Timeline |
| WisdomTree International |
| Relative Sentiment |
WisdomTree International and Relative Sentiment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree International and Relative Sentiment
The main advantage of trading using opposite WisdomTree International and Relative Sentiment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, Relative Sentiment 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 Relative Sentiment will offset losses from the drop in Relative Sentiment's long position.The idea behind WisdomTree International Multifactor and Relative Sentiment Tactical 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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