Correlation Between WisdomTree Emerging and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on WisdomTree Emerging and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Global X.
Diversification Opportunities for WisdomTree Emerging and Global X
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Global is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Global X go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and Global X
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to generate 0.96 times more return on investment than Global X. However, WisdomTree Emerging Markets is 1.04 times less risky than Global X. It trades about 0.04 of its potential returns per unit of risk. Global X Funds is currently generating about 0.01 per unit of risk. If you would invest 2,984 in WisdomTree Emerging Markets on September 1, 2024 and sell it today you would earn a total of 143.00 from holding WisdomTree Emerging Markets or generate 4.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. Global X Funds
Performance |
| Timeline |
| WisdomTree Emerging |
| Global X Funds |
WisdomTree Emerging and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and Global X
The main advantage of trading using opposite WisdomTree Emerging and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| WisdomTree Emerging vs. Xtrackers MSCI Emerging | WisdomTree Emerging vs. FlexShares Morningstar Emerging | WisdomTree Emerging vs. First Trust Emerging |
| Global X vs. SPDR Global Dow | Global X vs. First Trust Dow | Global X vs. SPDR SP Capital | Global X vs. First Trust Capital |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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