Correlation Between IShares Currency and WisdomTree Dynamic
Can any of the company-specific risk be diversified away by investing in both IShares Currency and WisdomTree Dynamic 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 Currency and WisdomTree Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Currency Hedged and WisdomTree Dynamic Currency, you can compare the effects of market volatilities on IShares Currency and WisdomTree Dynamic 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 Currency with a short position of WisdomTree Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Currency and WisdomTree Dynamic.
Diversification Opportunities for IShares Currency and WisdomTree Dynamic
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and WisdomTree is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding iShares Currency Hedged and WisdomTree Dynamic Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Dynamic and IShares Currency 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 Currency Hedged are associated (or correlated) with WisdomTree Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Dynamic has no effect on the direction of IShares Currency i.e., IShares Currency and WisdomTree Dynamic go up and down completely randomly.
Pair Corralation between IShares Currency and WisdomTree Dynamic
Given the investment horizon of 90 days iShares Currency Hedged is expected to generate 1.04 times more return on investment than WisdomTree Dynamic. However, IShares Currency is 1.04 times more volatile than WisdomTree Dynamic Currency. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Dynamic Currency is currently generating about 0.07 per unit of risk. If you would invest 2,516 in iShares Currency Hedged on August 30, 2024 and sell it today you would earn a total of 693.00 from holding iShares Currency Hedged or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Currency Hedged vs. WisdomTree Dynamic Currency
Performance |
| Timeline |
| iShares Currency Hedged |
| WisdomTree Dynamic |
IShares Currency and WisdomTree Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Currency and WisdomTree Dynamic
The main advantage of trading using opposite IShares Currency and WisdomTree Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Currency position performs unexpectedly, WisdomTree Dynamic 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 Dynamic will offset losses from the drop in WisdomTree Dynamic's long position.| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
| WisdomTree Dynamic vs. Vanguard International Dividend | WisdomTree Dynamic vs. Vanguard Global ex US | WisdomTree Dynamic vs. Vanguard High Dividend | WisdomTree Dynamic vs. Vanguard Emerging Markets |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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