Correlation Between WisdomTree Japan and IShares Core
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and IShares Core 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 Core 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 Core Aggressive, you can compare the effects of market volatilities on WisdomTree Japan and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and IShares Core.
Diversification Opportunities for WisdomTree Japan and IShares Core
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and iShares Core Aggressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggressive 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 Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggressive has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and IShares Core go up and down completely randomly.
Pair Corralation between WisdomTree Japan and IShares Core
Given the investment horizon of 90 days WisdomTree Japan Hedged is expected to generate 1.7 times more return on investment than IShares Core. However, WisdomTree Japan is 1.7 times more volatile than iShares Core Aggressive. It trades about 0.09 of its potential returns per unit of risk. iShares Core Aggressive is currently generating about 0.09 per unit of risk. If you would invest 2,171 in WisdomTree Japan Hedged on September 4, 2024 and sell it today you would earn a total of 1,287 from holding WisdomTree Japan Hedged or generate 59.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. iShares Core Aggressive
Performance |
| Timeline |
| WisdomTree Japan Hedged |
| iShares Core Aggressive |
WisdomTree Japan and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and IShares Core
The main advantage of trading using opposite WisdomTree Japan and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| WisdomTree Japan vs. iShares MSCI Qatar | WisdomTree Japan vs. iShares MSCI UAE | WisdomTree Japan vs. iShares MSCI Europe | WisdomTree Japan vs. iShares MSCI Japan |
| IShares Core vs. iShares Core Growth | IShares Core vs. iShares Core Moderate | IShares Core vs. iShares Core Conservative | IShares Core vs. iShares Core Total |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |