Correlation Between Defiance Leveraged and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Defiance Leveraged 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 Defiance Leveraged and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Leveraged Long and WisdomTree Emerging Markets, you can compare the effects of market volatilities on Defiance Leveraged 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 Defiance Leveraged with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Leveraged and WisdomTree Emerging.
Diversification Opportunities for Defiance Leveraged and WisdomTree Emerging
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Defiance and WisdomTree is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Leveraged Long and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and Defiance Leveraged 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 Leveraged Long 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 Defiance Leveraged i.e., Defiance Leveraged and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Defiance Leveraged and WisdomTree Emerging
Considering the 90-day investment horizon Defiance Leveraged Long is expected to under-perform the WisdomTree Emerging. In addition to that, Defiance Leveraged is 6.88 times more volatile than WisdomTree Emerging Markets. It trades about -0.02 of its total potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.32 per unit of volatility. If you would invest 5,603 in WisdomTree Emerging Markets on November 17, 2025 and sell it today you would earn a total of 759.00 from holding WisdomTree Emerging Markets or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 77.42% |
| Values | Daily Returns |
Defiance Leveraged Long vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| Defiance Leveraged Long |
Risk-Adjusted Performance
Weakest
Weak | Strong |
| WisdomTree Emerging |
Defiance Leveraged and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defiance Leveraged and WisdomTree Emerging
The main advantage of trading using opposite Defiance Leveraged and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Leveraged 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.The idea behind Defiance Leveraged Long and WisdomTree Emerging Markets pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| WisdomTree Emerging vs. WisdomTree SmallCap Dividend | WisdomTree Emerging vs. Freedom 100 Emerging | WisdomTree Emerging vs. WisdomTree High Dividend | WisdomTree Emerging vs. Invesco FTSE RAFI |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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