Correlation Between Xtrackers Harvest and WisdomTree China

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

By analyzing existing cross correlation between Xtrackers Harvest CSI and WisdomTree China ex State Owned, you can compare the effects of market volatilities on Xtrackers Harvest 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 Xtrackers Harvest with a short position of WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Harvest and WisdomTree China.

Diversification Opportunities for Xtrackers Harvest and WisdomTree China

0.57

Correlation Coefficient

Xtrackers Harvest  WisdomTree China

Very weak diversification

The 3 months correlation between Xtrackers and WisdomTree is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Harvest CSI 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 Xtrackers Harvest 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 Xtrackers Harvest CSI 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 Xtrackers Harvest i.e., Xtrackers Harvest and WisdomTree China go up and down completely randomly.

Pair Corralation between Xtrackers Harvest and WisdomTree China

Given the investment horizon of 90 days Xtrackers Harvest CSI is expected to under-perform the WisdomTree China. But the etf apears to be less risky and, when comparing its historical volatility, Xtrackers Harvest CSI is 1.26 times less risky than WisdomTree China. The etf trades about 0.0 of its potential returns per unit of risk. The WisdomTree China ex State Owned is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,028  in WisdomTree China ex State Owned on December 4, 2024 and sell it today you would earn a total of  315.00  from holding WisdomTree China ex State Owned or generate 10.4% return on investment over 90 days.

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

Xtrackers Harvest CSI  vs.  WisdomTree China ex State Owne

Xtrackers Harvest CSI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers Harvest CSI has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Xtrackers Harvest is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

WisdomTree China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree China ex State Owned are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, WisdomTree China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xtrackers Harvest and WisdomTree China

The main advantage of trading using opposite Xtrackers Harvest and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Harvest 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.

The idea behind Xtrackers Harvest CSI and WisdomTree China ex State Owned 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.