Correlation Between WisdomTree Emerging and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and Avantis 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 WisdomTree Emerging and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Emerging Markets and Avantis Emerging Markets, you can compare the effects of market volatilities on WisdomTree Emerging and Avantis 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 WisdomTree Emerging with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Avantis Emerging.
Diversification Opportunities for WisdomTree Emerging and Avantis Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Avantis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Avantis Emerging go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and Avantis Emerging
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to under-perform the Avantis Emerging. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Emerging Markets is 1.17 times less risky than Avantis Emerging. The etf trades about -0.15 of its potential returns per unit of risk. The Avantis Emerging Markets is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,009 in Avantis Emerging Markets on August 31, 2024 and sell it today you would lose (123.00) from holding Avantis Emerging Markets or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. Avantis Emerging Markets
Performance |
| Timeline |
| WisdomTree Emerging |
| Avantis Emerging Markets |
WisdomTree Emerging and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and Avantis Emerging
The main advantage of trading using opposite WisdomTree Emerging and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, Avantis 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 Avantis Emerging will offset losses from the drop in Avantis Emerging's long position.| WisdomTree Emerging vs. WisdomTree China ex State Owned | WisdomTree Emerging vs. iShares ESG Aware | WisdomTree Emerging vs. SPDR Portfolio Emerging | WisdomTree Emerging vs. WisdomTree International Hedged |
| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |