Correlation Between IShares Core and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both IShares Core and WisdomTree International 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 Core and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and WisdomTree International Hedged, you can compare the effects of market volatilities on IShares Core and WisdomTree International 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 Core with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and WisdomTree International.
Diversification Opportunities for IShares Core and WisdomTree International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and WisdomTree is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and WisdomTree International Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and IShares Core 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 Core MSCI are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of IShares Core i.e., IShares Core and WisdomTree International go up and down completely randomly.
Pair Corralation between IShares Core and WisdomTree International
Given the investment horizon of 90 days iShares Core MSCI is expected to under-perform the WisdomTree International. In addition to that, IShares Core is 1.33 times more volatile than WisdomTree International Hedged. It trades about -0.29 of its total potential returns per unit of risk. WisdomTree International Hedged is currently generating about -0.16 per unit of volatility. If you would invest 4,523 in WisdomTree International Hedged on August 28, 2024 and sell it today you would lose (103.00) from holding WisdomTree International Hedged or give up 2.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. WisdomTree International Hedge
Performance |
| Timeline |
| iShares Core MSCI |
| WisdomTree International |
IShares Core and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and WisdomTree International
The main advantage of trading using opposite IShares Core and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, WisdomTree International 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 International will offset losses from the drop in WisdomTree International's long position.| IShares Core vs. WisdomTree International Hedged | IShares Core vs. WisdomTree Emerging Markets | IShares Core vs. WisdomTree Dynamic Currency |
| WisdomTree International vs. iShares MSCI Intl | WisdomTree International vs. iShares Edge MSCI | WisdomTree International vs. iShares MSCI Emerging | WisdomTree International vs. iShares MSCI Intl |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |