Correlation Between WisdomTree China and Xtrackers Harvest
Can any of the company-specific risk be diversified away by investing in both WisdomTree China and Xtrackers Harvest 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 China and Xtrackers Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree China ex State Owned and Xtrackers Harvest CSI, you can compare the effects of market volatilities on WisdomTree China and Xtrackers Harvest 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 China with a short position of Xtrackers Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and Xtrackers Harvest.
Diversification Opportunities for WisdomTree China and Xtrackers Harvest
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Xtrackers is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and WisdomTree China 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 China ex State Owned are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of WisdomTree China i.e., WisdomTree China and Xtrackers Harvest go up and down completely randomly.
Pair Corralation between WisdomTree China and Xtrackers Harvest
Given the investment horizon of 90 days WisdomTree China is expected to generate 1.18 times less return on investment than Xtrackers Harvest. But when comparing it to its historical volatility, WisdomTree China ex State Owned is 1.13 times less risky than Xtrackers Harvest. It trades about 0.02 of its potential returns per unit of risk. Xtrackers Harvest CSI is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,621 in Xtrackers Harvest CSI on September 19, 2024 and sell it today you would earn a total of 245.00 from holding Xtrackers Harvest CSI or generate 9.35% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
WisdomTree China ex State Owne vs. Xtrackers Harvest CSI
Performance |
Timeline |
WisdomTree China |
Xtrackers Harvest CSI |
WisdomTree China and Xtrackers Harvest Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WisdomTree China and Xtrackers Harvest
The main advantage of trading using opposite WisdomTree China and Xtrackers Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China position performs unexpectedly, Xtrackers Harvest 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 Xtrackers Harvest will offset losses from the drop in Xtrackers Harvest's long position.WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
Xtrackers Harvest vs. Xtrackers Harvest CSI | Xtrackers Harvest vs. Direxion Daily CSI | Xtrackers Harvest vs. iShares MSCI China | Xtrackers Harvest vs. KraneShares Bosera MSCI |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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