Correlation Between WisdomTree Emerging and SPDR SP
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and SPDR SP 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 Emerging and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Emerging Markets and SPDR SP Emerging, you can compare the effects of market volatilities on WisdomTree Emerging and SPDR SP 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 Emerging with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and SPDR SP.
Diversification Opportunities for WisdomTree Emerging and SPDR SP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and SPDR is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Emerging has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and SPDR SP go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and SPDR SP
Considering the 90-day investment horizon WisdomTree Emerging is expected to generate 12.87 times less return on investment than SPDR SP. But when comparing it to its historical volatility, WisdomTree Emerging Markets is 1.14 times less risky than SPDR SP. It trades about 0.01 of its potential returns per unit of risk. SPDR SP Emerging is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,995 in SPDR SP Emerging on September 14, 2024 and sell it today you would earn a total of 575.00 from holding SPDR SP Emerging or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. SPDR SP Emerging
Performance |
| Timeline |
| WisdomTree Emerging |
| SPDR SP Emerging |
WisdomTree Emerging and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and SPDR SP
The main advantage of trading using opposite WisdomTree Emerging and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| WisdomTree Emerging vs. First Trust SSI | WisdomTree Emerging vs. First Trust BuyWrite | WisdomTree Emerging vs. First Trust Managed | WisdomTree Emerging vs. First Trust Tactical |
| SPDR SP vs. SPDR SP International | SPDR SP vs. iShares Emerging Markets | SPDR SP vs. First Trust Dow | SPDR SP vs. SPDR SP Global |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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