Correlation Between WisdomTree International and IShares Expanded

Can any of the company-specific risk be diversified away by investing in both WisdomTree International and IShares Expanded 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 International and IShares Expanded into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree International Al and iShares Expanded Tech, you can compare the effects of market volatilities on WisdomTree International and IShares Expanded 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 International with a short position of IShares Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and IShares Expanded.

Diversification Opportunities for WisdomTree International and IShares Expanded

-0.6

Correlation Coefficient

WisdomTree International  IShares Expanded

Excellent diversification

The 3 months correlation between WisdomTree and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Al and iShares Expanded Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech and WisdomTree International 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 International Al are associated (or correlated) with IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of WisdomTree International i.e., WisdomTree International and IShares Expanded go up and down completely randomly.

Pair Corralation between WisdomTree International and IShares Expanded

Given the investment horizon of 90 days WisdomTree International Al is expected to generate 0.48 times more return on investment than IShares Expanded. However, WisdomTree International Al is 2.09 times less risky than IShares Expanded. It trades about 0.25 of its potential returns per unit of risk. iShares Expanded Tech is currently generating about -0.11 per unit of risk. If you would invest  3,919  in WisdomTree International Al on December 30, 2024 and sell it today you would earn a total of  509.00  from holding WisdomTree International Al or generate 12.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

WisdomTree International Al  vs.  iShares Expanded Tech

WisdomTree International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Al are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, WisdomTree International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

iShares Expanded Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Expanded Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with WisdomTree International and IShares Expanded

The main advantage of trading using opposite WisdomTree International and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, IShares Expanded 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 Expanded will offset losses from the drop in IShares Expanded's long position.

The idea behind WisdomTree International Al and iShares Expanded Tech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.