Correlation Between WisdomTree NASDAQ and PIMCO Emerging
Can any of the company-specific risk be diversified away by investing in both WisdomTree NASDAQ and PIMCO 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 WisdomTree NASDAQ and PIMCO Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree NASDAQ 100 and PIMCO Emerging Markets, you can compare the effects of market volatilities on WisdomTree NASDAQ and PIMCO 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 WisdomTree NASDAQ with a short position of PIMCO Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree NASDAQ and PIMCO Emerging.
Diversification Opportunities for WisdomTree NASDAQ and PIMCO Emerging
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WisdomTree and PIMCO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree NASDAQ 100 and PIMCO Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Emerging Markets and WisdomTree NASDAQ 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 WisdomTree NASDAQ 100 are associated (or correlated) with PIMCO Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Emerging Markets has no effect on the direction of WisdomTree NASDAQ i.e., WisdomTree NASDAQ and PIMCO Emerging go up and down completely randomly.
Pair Corralation between WisdomTree NASDAQ and PIMCO Emerging
Assuming the 90 days trading horizon WisdomTree NASDAQ 100 is expected to generate 6.2 times more return on investment than PIMCO Emerging. However, WisdomTree NASDAQ is 6.2 times more volatile than PIMCO Emerging Markets. It trades about 0.28 of its potential returns per unit of risk. PIMCO Emerging Markets is currently generating about -0.1 per unit of risk. If you would invest 21,465 in WisdomTree NASDAQ 100 on September 5, 2024 and sell it today you would earn a total of 4,229 from holding WisdomTree NASDAQ 100 or generate 19.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree NASDAQ 100 vs. PIMCO Emerging Markets
Performance |
| Timeline |
| WisdomTree NASDAQ 100 |
| PIMCO Emerging Markets |
WisdomTree NASDAQ and PIMCO Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree NASDAQ and PIMCO Emerging
The main advantage of trading using opposite WisdomTree NASDAQ and PIMCO Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree NASDAQ position performs unexpectedly, PIMCO 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 PIMCO Emerging will offset losses from the drop in PIMCO Emerging's long position.| WisdomTree NASDAQ vs. Vanguard FTSE Developed | WisdomTree NASDAQ vs. Amundi Index Solutions | WisdomTree NASDAQ vs. Amundi Index Solutions | WisdomTree NASDAQ vs. Albion Venture Capital |
| PIMCO Emerging vs. Leverage Shares 3x | PIMCO Emerging vs. WisdomTree Natural Gas | PIMCO Emerging vs. SP 500 VIX | PIMCO Emerging vs. Leverage Shares 3x |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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