Correlation Between Defiance and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Defiance and WisdomTree Japan 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 Defiance and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance SP 500 and WisdomTree Japan Hedged, you can compare the effects of market volatilities on Defiance and WisdomTree Japan 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 Defiance with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance and WisdomTree Japan.
Diversification Opportunities for Defiance and WisdomTree Japan
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Defiance and WisdomTree is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Defiance SP 500 and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged and Defiance 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 Defiance SP 500 are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of Defiance i.e., Defiance and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Defiance and WisdomTree Japan
Given the investment horizon of 90 days Defiance SP 500 is expected to generate 7.74 times more return on investment than WisdomTree Japan. However, Defiance is 7.74 times more volatile than WisdomTree Japan Hedged. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.05 per unit of risk. If you would invest 546.00 in Defiance SP 500 on September 29, 2025 and sell it today you would earn a total of 2,662 from holding Defiance SP 500 or generate 487.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 75.4% |
| Values | Daily Returns |
Defiance SP 500 vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| Defiance SP 500 |
| WisdomTree Japan Hedged |
Risk-Adjusted Performance
Weakest
Weak | Strong |
Defiance and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defiance and WisdomTree Japan
The main advantage of trading using opposite Defiance and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan's long position.| Defiance vs. Roundhill Acquirers Deep | Defiance vs. Franklin International Core | Defiance vs. Harbor ETF Trust | Defiance vs. Collaborative Investment Series |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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