Correlation Between WisdomTree Emerging and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging 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 Emerging 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 Emerging Markets and Xtrackers MSCI Emerging, you can compare the effects of market volatilities on WisdomTree Emerging 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 Emerging with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Xtrackers MSCI.
Diversification Opportunities for WisdomTree Emerging and Xtrackers MSCI
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Xtrackers is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and Xtrackers MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI 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 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 Emerging has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and Xtrackers MSCI
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to generate 0.9 times more return on investment than Xtrackers MSCI. However, WisdomTree Emerging Markets is 1.11 times less risky than Xtrackers MSCI. It trades about -0.06 of its potential returns per unit of risk. Xtrackers MSCI Emerging is currently generating about -0.13 per unit of risk. If you would invest 2,739 in WisdomTree Emerging Markets on September 2, 2024 and sell it today you would lose (28.00) from holding WisdomTree Emerging Markets or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. Xtrackers MSCI Emerging
Performance |
| Timeline |
| WisdomTree Emerging |
| Xtrackers MSCI Emerging |
WisdomTree Emerging and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and Xtrackers MSCI
The main advantage of trading using opposite WisdomTree Emerging and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging 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 Emerging vs. Xtrackers MSCI Emerging | WisdomTree Emerging vs. FlexShares Morningstar Emerging | WisdomTree Emerging vs. First Trust Emerging |
| Xtrackers MSCI vs. Xtrackers MSCI EAFE | Xtrackers MSCI vs. Xtrackers MSCI All | Xtrackers MSCI vs. Xtrackers MSCI Japan | Xtrackers MSCI vs. iShares Currency 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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