Correlation Between KBND and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both KBND and WisdomTree Emerging 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 KBND and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KBND and WisdomTree Emerging Markets, you can compare the effects of market volatilities on KBND and WisdomTree Emerging 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 KBND with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of KBND and WisdomTree Emerging.
Diversification Opportunities for KBND and WisdomTree Emerging
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KBND and WisdomTree is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KBND and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and KBND 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 KBND are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of KBND i.e., KBND and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between KBND and WisdomTree Emerging
If you would invest 2,637 in WisdomTree Emerging Markets on August 27, 2024 and sell it today you would lose (10.00) from holding WisdomTree Emerging Markets or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.53% |
| Values | Daily Returns |
KBND vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| KBND |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| WisdomTree Emerging |
KBND and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KBND and WisdomTree Emerging
The main advantage of trading using opposite KBND and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KBND position performs unexpectedly, WisdomTree Emerging 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 Emerging will offset losses from the drop in WisdomTree Emerging's long position.| KBND vs. VanEck China Bond | KBND vs. KraneShares Asia Pacific | KBND vs. KraneShares MSCI All | KBND vs. First Trust Long |
| WisdomTree Emerging vs. VanEck JP Morgan | WisdomTree Emerging vs. Invesco Emerging Markets | WisdomTree Emerging vs. SPDR Bloomberg Emerging | WisdomTree Emerging vs. iShares JP Morgan |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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