Correlation Between IShares MSCI and WisdomTree Global
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and WisdomTree Global 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 IShares MSCI and WisdomTree Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Japan and WisdomTree Global ex US, you can compare the effects of market volatilities on IShares MSCI and WisdomTree Global 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 IShares MSCI with a short position of WisdomTree Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and WisdomTree Global.
Diversification Opportunities for IShares MSCI and WisdomTree Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and WisdomTree is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan and WisdomTree Global ex US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global and IShares MSCI 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 iShares MSCI Japan are associated (or correlated) with WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global has no effect on the direction of IShares MSCI i.e., IShares MSCI and WisdomTree Global go up and down completely randomly.
Pair Corralation between IShares MSCI and WisdomTree Global
Considering the 90-day investment horizon iShares MSCI Japan is expected to generate 1.15 times more return on investment than WisdomTree Global. However, IShares MSCI is 1.15 times more volatile than WisdomTree Global ex US. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Global ex US is currently generating about 0.04 per unit of risk. If you would invest 5,296 in iShares MSCI Japan on August 27, 2024 and sell it today you would earn a total of 1,499 from holding iShares MSCI Japan or generate 28.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Japan vs. WisdomTree Global ex US
Performance |
| Timeline |
| iShares MSCI Japan |
| WisdomTree Global |
IShares MSCI and WisdomTree Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and WisdomTree Global
The main advantage of trading using opposite IShares MSCI and WisdomTree Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, WisdomTree Global 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 Global will offset losses from the drop in WisdomTree Global's long position.| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Taiwan | IShares MSCI vs. iShares MSCI Germany |
| WisdomTree Global vs. WisdomTree Global High | WisdomTree Global vs. WisdomTree International MidCap | WisdomTree Global vs. WisdomTree Japan SmallCap | WisdomTree Global vs. WisdomTree International High |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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