Correlation Between WisdomTree Japan and Wisdomtree Digital
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and Wisdomtree Digital 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 Wisdomtree Digital 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 Wisdomtree Digital Trust, you can compare the effects of market volatilities on WisdomTree Japan and Wisdomtree Digital 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 Wisdomtree Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and Wisdomtree Digital.
Diversification Opportunities for WisdomTree Japan and Wisdomtree Digital
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Wisdomtree is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and Wisdomtree Digital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Digital Trust 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 Wisdomtree Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Digital Trust has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and Wisdomtree Digital go up and down completely randomly.
Pair Corralation between WisdomTree Japan and Wisdomtree Digital
Given the investment horizon of 90 days WisdomTree Japan Hedged is expected to generate 12.94 times more return on investment than Wisdomtree Digital. However, WisdomTree Japan is 12.94 times more volatile than Wisdomtree Digital Trust. It trades about 0.22 of its potential returns per unit of risk. Wisdomtree Digital Trust is currently generating about 0.16 per unit of risk. If you would invest 4,404 in WisdomTree Japan Hedged on November 8, 2025 and sell it today you would earn a total of 598.00 from holding WisdomTree Japan Hedged or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.67% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. Wisdomtree Digital Trust
Performance |
| Timeline |
| WisdomTree Japan Hedged |
Risk-Adjusted Performance
Solid
Weak | Strong |
| Wisdomtree Digital Trust |
WisdomTree Japan and Wisdomtree Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and Wisdomtree Digital
The main advantage of trading using opposite WisdomTree Japan and Wisdomtree Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, Wisdomtree Digital 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 Wisdomtree Digital will offset losses from the drop in Wisdomtree Digital's long position.The idea behind WisdomTree Japan Hedged and Wisdomtree Digital Trust 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.| Wisdomtree Digital vs. Wisdomtree Digital Trust | Wisdomtree Digital vs. WisdomTree Corporate Bond | Wisdomtree Digital vs. WisdomTree High Yield | Wisdomtree Digital vs. WisdomTree Issuer ICAV |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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