Correlation Between SPDR SP and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP China and WisdomTree China ex State Owned, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and WisdomTree China.
Diversification Opportunities for SPDR SP and WisdomTree China
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and WisdomTree is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP China 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 SPDR SP 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 SPDR SP China 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 SPDR SP i.e., SPDR SP and WisdomTree China go up and down completely randomly.
Pair Corralation between SPDR SP and WisdomTree China
Considering the 90-day investment horizon SPDR SP China is expected to generate 0.91 times more return on investment than WisdomTree China. However, SPDR SP China is 1.1 times less risky than WisdomTree China. It trades about 0.01 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 7,431 in SPDR SP China on August 28, 2024 and sell it today you would earn a total of 115.00 from holding SPDR SP China or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP China vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| SPDR SP China |
| WisdomTree China |
SPDR SP and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and WisdomTree China
The main advantage of trading using opposite SPDR SP and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. Invesco Golden Dragon | SPDR SP vs. iShares MSCI Hong | SPDR SP vs. iShares MSCI China | SPDR SP vs. iShares China Large Cap |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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