Correlation Between IShares International and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both IShares International 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 International 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 International Developed and WisdomTree International MidCap, you can compare the effects of market volatilities on IShares International 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 International with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and WisdomTree International.
Diversification Opportunities for IShares International and WisdomTree International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope and WisdomTree International MidCa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and IShares International 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 International Developed 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 International i.e., IShares International and WisdomTree International go up and down completely randomly.
Pair Corralation between IShares International and WisdomTree International
Given the investment horizon of 90 days iShares International Developed is expected to generate 0.87 times more return on investment than WisdomTree International. However, iShares International Developed is 1.15 times less risky than WisdomTree International. It trades about -0.13 of its potential returns per unit of risk. WisdomTree International MidCap is currently generating about -0.13 per unit of risk. If you would invest 3,635 in iShares International Developed on August 28, 2024 and sell it today you would lose (72.00) from holding iShares International Developed or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. WisdomTree International MidCa
Performance |
| Timeline |
| iShares International |
| WisdomTree International |
IShares International and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and WisdomTree International
The main advantage of trading using opposite IShares International and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International 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 International vs. iShares Morningstar Small Cap | IShares International vs. iShares Edge MSCI | IShares International vs. iShares MSCI Intl | IShares International vs. iShares Small Cap |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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