Correlation Between WisdomTree Emerging and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and WisdomTree China 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 WisdomTree China 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 WisdomTree China ex State Owned, you can compare the effects of market volatilities on WisdomTree Emerging and WisdomTree China 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 WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and WisdomTree China.
Diversification Opportunities for WisdomTree Emerging and WisdomTree China
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and WisdomTree China go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and WisdomTree China
Given the investment horizon of 90 days WisdomTree Emerging is expected to generate 3.69 times less return on investment than WisdomTree China. But when comparing it to its historical volatility, WisdomTree Emerging Markets is 1.6 times less risky than WisdomTree China. It trades about 0.09 of its potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,937 in WisdomTree China ex State Owned on November 3, 2024 and sell it today you would earn a total of 194.00 from holding WisdomTree China ex State Owned or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| WisdomTree Emerging |
| WisdomTree China |
WisdomTree Emerging and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and WisdomTree China
The main advantage of trading using opposite WisdomTree Emerging and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, WisdomTree China 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 China will offset losses from the drop in WisdomTree China'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 |
| WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
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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