Correlation Between WisdomTree India and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree India and Global X 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 India and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree India Earnings and Global X Funds, you can compare the effects of market volatilities on WisdomTree India and Global X 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 India with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree India and Global X.
Diversification Opportunities for WisdomTree India and Global X
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Global is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree India Earnings and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and WisdomTree India 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 India Earnings are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of WisdomTree India i.e., WisdomTree India and Global X go up and down completely randomly.
Pair Corralation between WisdomTree India and Global X
Considering the 90-day investment horizon WisdomTree India is expected to generate 17.89 times less return on investment than Global X. But when comparing it to its historical volatility, WisdomTree India Earnings is 1.04 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X Funds is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,084 in Global X Funds on September 1, 2024 and sell it today you would earn a total of 8.00 from holding Global X Funds or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
WisdomTree India Earnings vs. Global X Funds
Performance |
| Timeline |
| WisdomTree India Earnings |
| Global X Funds |
WisdomTree India and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree India and Global X
The main advantage of trading using opposite WisdomTree India and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree India position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| WisdomTree India vs. Invesco India ETF | WisdomTree India vs. iShares India 50 | WisdomTree India vs. iShares MSCI India | WisdomTree India vs. iShares MSCI Mexico |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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