Correlation Between WisdomTree Japan and IShares
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and IShares 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 IShares 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 IShares, you can compare the effects of market volatilities on WisdomTree Japan and IShares 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 IShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and IShares.
Diversification Opportunities for WisdomTree Japan and IShares
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and IShares is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and IShares go up and down completely randomly.
Pair Corralation between WisdomTree Japan and IShares
Considering the 90-day investment horizon WisdomTree Japan Hedged is expected to generate 1.44 times more return on investment than IShares. However, WisdomTree Japan is 1.44 times more volatile than IShares. It trades about 0.1 of its potential returns per unit of risk. IShares is currently generating about 0.07 per unit of risk. If you would invest 6,353 in WisdomTree Japan Hedged on August 29, 2024 and sell it today you would earn a total of 4,565 from holding WisdomTree Japan Hedged or generate 71.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.05% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. IShares
Performance |
| Timeline |
| WisdomTree Japan Hedged |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WisdomTree Japan and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and IShares
The main advantage of trading using opposite WisdomTree Japan and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, IShares 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 IShares will offset losses from the drop in IShares' long position.| WisdomTree Japan vs. iShares MSCI South | WisdomTree Japan vs. iShares MSCI Hong | WisdomTree Japan vs. iShares MSCI Taiwan | WisdomTree Japan vs. iShares MSCI Germany |
| IShares vs. iShares MSCI Hong | IShares vs. HUMANA INC | IShares vs. SCOR PK | IShares vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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