Correlation Between WisdomTree Trust and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both WisdomTree Trust and WisdomTree Japan 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 Trust and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Trust and WisdomTree Japan Hedged, you can compare the effects of market volatilities on WisdomTree Trust and WisdomTree Japan 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 Trust with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Trust and WisdomTree Japan.
Diversification Opportunities for WisdomTree Trust and WisdomTree Japan
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged and WisdomTree Trust 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 Trust are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and WisdomTree Japan go up and down completely randomly.
Pair Corralation between WisdomTree Trust and WisdomTree Japan
If you would invest 9,186 in WisdomTree Trust on September 30, 2025 and sell it today you would earn a total of 238.00 from holding WisdomTree Trust or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 5.0% |
| Values | Daily Returns |
WisdomTree Trust vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| WisdomTree Trust |
| WisdomTree Japan Hedged |
Risk-Adjusted Performance
Weakest
Weak | Strong |
WisdomTree Trust and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Trust and WisdomTree Japan
The main advantage of trading using opposite WisdomTree Trust and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Trust position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan's long position.| WisdomTree Trust vs. Fidelity Small Mid Factor | WisdomTree Trust vs. ProShares SP MidCap | WisdomTree Trust vs. iShares Russell 2500 | WisdomTree Trust vs. Invesco SP 500 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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