Correlation Between IShares Micro and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both IShares Micro 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 Micro 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 Micro Cap ETF and WisdomTree International SmallCap, you can compare the effects of market volatilities on IShares Micro 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 Micro with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Micro and WisdomTree International.
Diversification Opportunities for IShares Micro and WisdomTree International
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and WisdomTree is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Micro Cap ETF and WisdomTree International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and IShares Micro 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 Micro Cap ETF 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 Micro i.e., IShares Micro and WisdomTree International go up and down completely randomly.
Pair Corralation between IShares Micro and WisdomTree International
Considering the 90-day investment horizon iShares Micro Cap ETF is expected to generate 1.68 times more return on investment than WisdomTree International. However, IShares Micro is 1.68 times more volatile than WisdomTree International SmallCap. It trades about 0.06 of its potential returns per unit of risk. WisdomTree International SmallCap is currently generating about 0.03 per unit of risk. If you would invest 11,757 in iShares Micro Cap ETF on August 27, 2024 and sell it today you would earn a total of 1,817 from holding iShares Micro Cap ETF or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Micro Cap ETF vs. WisdomTree International Small
Performance |
| Timeline |
| iShares Micro Cap |
| WisdomTree International |
IShares Micro and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Micro and WisdomTree International
The main advantage of trading using opposite IShares Micro and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Micro 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 Micro vs. iShares SP Small Cap | IShares Micro vs. iShares SP Small Cap | IShares Micro vs. iShares SP Mid Cap | IShares Micro vs. iShares Russell 1000 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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