Correlation Between IShares China and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both IShares China and WisdomTree China 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 China and WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China Large Cap and WisdomTree China ex State Owned, you can compare the effects of market volatilities on IShares China and WisdomTree China 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 China with a short position of WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and WisdomTree China.
Diversification Opportunities for IShares China and WisdomTree China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares China Large Cap and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China and IShares China 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 China Large Cap are associated (or correlated) with WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of IShares China i.e., IShares China and WisdomTree China go up and down completely randomly.
Pair Corralation between IShares China and WisdomTree China
Considering the 90-day investment horizon iShares China Large Cap is expected to generate 1.0 times more return on investment than WisdomTree China. However, IShares China is 1.0 times more volatile than WisdomTree China ex State Owned. It trades about 0.02 of its potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.0 per unit of risk. If you would invest 2,667 in iShares China Large Cap on August 28, 2024 and sell it today you would earn a total of 303.00 from holding iShares China Large Cap or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China Large Cap vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| iShares China Large |
| WisdomTree China |
IShares China and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and WisdomTree China
The main advantage of trading using opposite IShares China and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, WisdomTree China 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 China will offset losses from the drop in WisdomTree China's long position.| IShares China vs. iShares MSCI Brazil | IShares China vs. iShares MSCI Emerging | IShares China vs. iShares MSCI Japan | IShares China vs. iShares MSCI Hong |
| WisdomTree China vs. iShares MSCI Singapore | WisdomTree China vs. iShares MSCI Malaysia | WisdomTree China vs. iShares MSCI Australia | WisdomTree China vs. iShares MSCI South |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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