Correlation Between IShares MSCI and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI EAFE and WisdomTree International SmallCap, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and WisdomTree International.
Diversification Opportunities for IShares MSCI and WisdomTree International
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE 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 MSCI 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 MSCI EAFE 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 MSCI i.e., IShares MSCI and WisdomTree International go up and down completely randomly.
Pair Corralation between IShares MSCI and WisdomTree International
Considering the 90-day investment horizon iShares MSCI EAFE is expected to under-perform the WisdomTree International. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI EAFE is 1.01 times less risky than WisdomTree International. The etf trades about -0.01 of its potential returns per unit of risk. The WisdomTree International SmallCap is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 6,458 in WisdomTree International SmallCap on August 24, 2024 and sell it today you would lose (84.00) from holding WisdomTree International SmallCap or give up 1.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. WisdomTree International Small
Performance |
| Timeline |
| iShares MSCI EAFE |
| WisdomTree International |
IShares MSCI and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and WisdomTree International
The main advantage of trading using opposite IShares MSCI and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI vs. Dimensional ETF Trust | IShares MSCI vs. Vanguard Small Cap Index | IShares MSCI vs. First Trust Multi Manager | IShares MSCI vs. Vanguard SP Small Cap |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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