Correlation Between WisdomTree Japan and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and Xtrackers MSCI 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 Japan and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Japan Hedged and Xtrackers MSCI Japan, you can compare the effects of market volatilities on WisdomTree Japan and Xtrackers MSCI 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 Japan with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and Xtrackers MSCI.
Diversification Opportunities for WisdomTree Japan and Xtrackers MSCI
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between WisdomTree and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and Xtrackers MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI Japan and WisdomTree Japan 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 Japan Hedged are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI Japan has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Japan and Xtrackers MSCI
Considering the 90-day investment horizon WisdomTree Japan Hedged is expected to generate 0.99 times more return on investment than Xtrackers MSCI. However, WisdomTree Japan Hedged is 1.01 times less risky than Xtrackers MSCI. It trades about 0.06 of its potential returns per unit of risk. Xtrackers MSCI Japan is currently generating about 0.04 per unit of risk. If you would invest 10,782 in WisdomTree Japan Hedged on August 29, 2024 and sell it today you would earn a total of 136.00 from holding WisdomTree Japan Hedged or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. Xtrackers MSCI Japan
Performance |
| Timeline |
| WisdomTree Japan Hedged |
| Xtrackers MSCI Japan |
WisdomTree Japan and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and Xtrackers MSCI
The main advantage of trading using opposite WisdomTree Japan and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| WisdomTree Japan vs. WisdomTree Europe Hedged | WisdomTree Japan vs. WisdomTree Japan SmallCap | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. iShares MSCI Japan |
| Xtrackers MSCI vs. iShares Currency Hedged | Xtrackers MSCI vs. Xtrackers MSCI Europe | Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. WisdomTree Japan Hedged |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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