Correlation Between Vanguard Value and WisdomTree Trust
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and WisdomTree Trust 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 Vanguard Value and WisdomTree Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and WisdomTree Trust , you can compare the effects of market volatilities on Vanguard Value and WisdomTree Trust 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 Vanguard Value with a short position of WisdomTree Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and WisdomTree Trust.
Diversification Opportunities for Vanguard Value and WisdomTree Trust
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and WisdomTree is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Trust and Vanguard Value 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 Vanguard Value Index are associated (or correlated) with WisdomTree Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of Vanguard Value i.e., Vanguard Value and WisdomTree Trust go up and down completely randomly.
Pair Corralation between Vanguard Value and WisdomTree Trust
Considering the 90-day investment horizon Vanguard Value is expected to generate 2.24 times less return on investment than WisdomTree Trust. But when comparing it to its historical volatility, Vanguard Value Index is 1.3 times less risky than WisdomTree Trust. It trades about 0.16 of its potential returns per unit of risk. WisdomTree Trust is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,672 in WisdomTree Trust on August 28, 2024 and sell it today you would earn a total of 1,219 from holding WisdomTree Trust or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. WisdomTree Trust
Performance |
| Timeline |
| Vanguard Value Index |
| WisdomTree Trust |
Vanguard Value and WisdomTree Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and WisdomTree Trust
The main advantage of trading using opposite Vanguard Value and WisdomTree Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, WisdomTree Trust 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 Trust will offset losses from the drop in WisdomTree Trust's long position.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| WisdomTree Trust vs. BlackRock ETF Trust | WisdomTree Trust vs. Rbb Fund | WisdomTree Trust vs. Virtus ETF Trust | WisdomTree Trust vs. Amplify CWP Enhanced |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |