Correlation Between WisdomTree Emerging and FlexShares Emerging
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and FlexShares 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 FlexShares 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 FlexShares Emerging Markets, you can compare the effects of market volatilities on WisdomTree Emerging and FlexShares 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 FlexShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and FlexShares Emerging.
Diversification Opportunities for WisdomTree Emerging and FlexShares Emerging
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and FlexShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and FlexShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Emerging 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 FlexShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Emerging has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and FlexShares Emerging go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and FlexShares Emerging
Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to under-perform the FlexShares Emerging. In addition to that, WisdomTree Emerging is 1.45 times more volatile than FlexShares Emerging Markets. It trades about -0.2 of its total potential returns per unit of risk. FlexShares Emerging Markets is currently generating about -0.2 per unit of volatility. If you would invest 2,647 in FlexShares Emerging Markets on August 30, 2024 and sell it today you would lose (75.00) from holding FlexShares Emerging Markets or give up 2.83% 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. FlexShares Emerging Markets
Performance |
| Timeline |
| WisdomTree Emerging |
| FlexShares Emerging |
WisdomTree Emerging and FlexShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and FlexShares Emerging
The main advantage of trading using opposite WisdomTree Emerging and FlexShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, FlexShares 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 FlexShares Emerging will offset losses from the drop in FlexShares Emerging's long position.| WisdomTree Emerging vs. ABIVAX Socit Anonyme | WisdomTree Emerging vs. HUMANA INC | WisdomTree Emerging vs. SCOR PK | WisdomTree Emerging vs. Aquagold International |
| FlexShares Emerging vs. ABIVAX Socit Anonyme | FlexShares Emerging vs. HUMANA INC | FlexShares Emerging vs. SCOR PK | FlexShares Emerging vs. Aquagold International |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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