Correlation Between SPDR BOFA and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both SPDR BOFA 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 SPDR BOFA and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR BOFA MERRILL and WisdomTree International Efficient, you can compare the effects of market volatilities on SPDR BOFA 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 SPDR BOFA with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR BOFA and WisdomTree International.
Diversification Opportunities for SPDR BOFA and WisdomTree International
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPDR and WisdomTree is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding SPDR BOFA MERRILL and WisdomTree International Effic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and SPDR BOFA 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 SPDR BOFA MERRILL 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 SPDR BOFA i.e., SPDR BOFA and WisdomTree International go up and down completely randomly.
Pair Corralation between SPDR BOFA and WisdomTree International
Given the investment horizon of 90 days SPDR BOFA MERRILL is expected to generate 1.76 times more return on investment than WisdomTree International. However, SPDR BOFA is 1.76 times more volatile than WisdomTree International Efficient. It trades about 0.12 of its potential returns per unit of risk. WisdomTree International Efficient is currently generating about 0.0 per unit of risk. If you would invest 1,478 in SPDR BOFA MERRILL on September 1, 2024 and sell it today you would earn a total of 364.00 from holding SPDR BOFA MERRILL or generate 24.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR BOFA MERRILL vs. WisdomTree International Effic
Performance |
| Timeline |
| SPDR BOFA MERRILL |
| WisdomTree International |
SPDR BOFA and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR BOFA and WisdomTree International
The main advantage of trading using opposite SPDR BOFA and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR BOFA 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.| SPDR BOFA vs. Invesco Actively Managed | SPDR BOFA vs. iShares Trust | SPDR BOFA vs. Xtrackers MSCI Emerging | SPDR BOFA vs. iShares MSCI Emerging |
| WisdomTree International vs. SPDR SSgA Global | WisdomTree International vs. SPDR SSgA Income | WisdomTree International vs. VanEck Inflation Allocation | WisdomTree International vs. SPDR MSCI EAFE |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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