Correlation Between Select STOXX and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Select STOXX and WisdomTree Emerging 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 Select STOXX and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select STOXX Europe and WisdomTree Emerging Currency, you can compare the effects of market volatilities on Select STOXX and WisdomTree Emerging 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 Select STOXX with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select STOXX and WisdomTree Emerging.
Diversification Opportunities for Select STOXX and WisdomTree Emerging
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and WisdomTree is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Select STOXX Europe and WisdomTree Emerging Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and Select STOXX 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 Select STOXX Europe are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Select STOXX i.e., Select STOXX and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Select STOXX and WisdomTree Emerging
Given the investment horizon of 90 days Select STOXX Europe is expected to generate 5.37 times more return on investment than WisdomTree Emerging. However, Select STOXX is 5.37 times more volatile than WisdomTree Emerging Currency. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Emerging Currency is currently generating about 0.24 per unit of risk. If you would invest 4,312 in Select STOXX Europe on November 17, 2025 and sell it today you would earn a total of 302.00 from holding Select STOXX Europe or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select STOXX Europe vs. WisdomTree Emerging Currency
Performance |
| Timeline |
| Select STOXX Europe |
| WisdomTree Emerging |
Select STOXX and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select STOXX and WisdomTree Emerging
The main advantage of trading using opposite Select STOXX and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select STOXX position performs unexpectedly, WisdomTree Emerging 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 Emerging will offset losses from the drop in WisdomTree Emerging's long position.| Select STOXX vs. iShares Regional Banks | Select STOXX vs. iShares MSCI Singapore | Select STOXX vs. iShares Currency Hedged | Select STOXX vs. iShares Insurance ETF |
| WisdomTree Emerging vs. US Global Sea | WisdomTree Emerging vs. Spinnaker ETF Series | WisdomTree Emerging vs. ProShares Equities for | WisdomTree Emerging vs. Tidal ETF Trust |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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