Correlation Between AAM SP and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both AAM SP 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 AAM SP and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAM SP 500 and WisdomTree Emerging Markets, you can compare the effects of market volatilities on AAM SP 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 AAM SP with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAM SP and WisdomTree Emerging.
Diversification Opportunities for AAM SP and WisdomTree Emerging
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AAM and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding AAM SP 500 and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and AAM SP 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 AAM SP 500 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 AAM SP i.e., AAM SP and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between AAM SP and WisdomTree Emerging
Given the investment horizon of 90 days AAM SP 500 is expected to generate 1.3 times more return on investment than WisdomTree Emerging. However, AAM SP is 1.3 times more volatile than WisdomTree Emerging Markets. It trades about 0.24 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.3 per unit of risk. If you would invest 3,407 in AAM SP 500 on December 2, 2025 and sell it today you would earn a total of 428.00 from holding AAM SP 500 or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAM SP 500 vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| AAM SP 500 |
| WisdomTree Emerging |
AAM SP and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAM SP and WisdomTree Emerging
The main advantage of trading using opposite AAM SP and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAM SP 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.| AAM SP vs. BlackRock High Yield | AAM SP vs. Invesco SP 500 | AAM SP vs. First Trust Germany | AAM SP vs. The RBB Fund |
| WisdomTree Emerging vs. WisdomTree MidCap Dividend | WisdomTree Emerging vs. iShares Home Construction | WisdomTree Emerging vs. iShares MSCI All | WisdomTree Emerging vs. WisdomTree India Earnings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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