Correlation Between Wilshire International and Large Company
Can any of the company-specific risk be diversified away by investing in both Wilshire International and Large Company 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 Wilshire International and Large Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilshire International Equity and Large Pany Value, you can compare the effects of market volatilities on Wilshire International and Large Company 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 Wilshire International with a short position of Large Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilshire International and Large Company.
Diversification Opportunities for Wilshire International and Large Company
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wilshire and Large is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wilshire International Equity and Large Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Pany Value and Wilshire International 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 Wilshire International Equity are associated (or correlated) with Large Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Pany Value has no effect on the direction of Wilshire International i.e., Wilshire International and Large Company go up and down completely randomly.
Pair Corralation between Wilshire International and Large Company
Assuming the 90 days horizon Wilshire International is expected to generate 1.21 times less return on investment than Large Company. But when comparing it to its historical volatility, Wilshire International Equity is 1.04 times less risky than Large Company. It trades about 0.21 of its potential returns per unit of risk. Large Pany Value is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,147 in Large Pany Value on October 26, 2024 and sell it today you would earn a total of 74.00 from holding Large Pany Value or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Wilshire International Equity vs. Large Pany Value
Performance |
| Timeline |
| Wilshire International |
| Large Pany Value |
Wilshire International and Large Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilshire International and Large Company
The main advantage of trading using opposite Wilshire International and Large Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilshire International position performs unexpectedly, Large Company 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 Large Company will offset losses from the drop in Large Company's long position.| Wilshire International vs. Cref Money Market | Wilshire International vs. Elfun Government Money | Wilshire International vs. Edward Jones Money | Wilshire International vs. Blackrock Exchange Portfolio |
| Large Company vs. Wilshire Large | Large Company vs. Small Pany Value | Large Company vs. Small Pany Growth | Large Company vs. Wilshire 5000 Index |
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 Stocks Directory module to find actively traded stocks across global markets.
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