Correlation Between WisdomTree Emerging and IShares Currency
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and IShares Currency 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 IShares Currency 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 iShares Currency Hedged, you can compare the effects of market volatilities on WisdomTree Emerging and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and IShares Currency.
Diversification Opportunities for WisdomTree Emerging and IShares Currency
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and IShares Currency go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and IShares Currency
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to under-perform the IShares Currency. In addition to that, WisdomTree Emerging is 1.1 times more volatile than iShares Currency Hedged. It trades about -0.12 of its total potential returns per unit of risk. iShares Currency Hedged is currently generating about -0.08 per unit of volatility. If you would invest 2,799 in iShares Currency Hedged on September 1, 2024 and sell it today you would lose (45.00) from holding iShares Currency Hedged or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. iShares Currency Hedged
Performance |
| Timeline |
| WisdomTree Emerging |
| iShares Currency Hedged |
WisdomTree Emerging and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and IShares Currency
The main advantage of trading using opposite WisdomTree Emerging and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, IShares Currency 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 IShares Currency will offset losses from the drop in IShares Currency's long position.| WisdomTree Emerging vs. Xtrackers MSCI Emerging | WisdomTree Emerging vs. FlexShares Morningstar Emerging | WisdomTree Emerging vs. First Trust Emerging |
| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |