Correlation Between WisdomTree International and Global X

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

By analyzing existing cross correlation between WisdomTree International High and Global X MSCI, you can compare the effects of market volatilities on WisdomTree International and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Global X.

Diversification Opportunities for WisdomTree International and Global X

0.59

Correlation Coefficient

WisdomTree International  Global X

Very weak diversification

The 3 months correlation between WisdomTree and Global is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International High and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI 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 High are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MSCI has no effect on the direction of WisdomTree International i.e., WisdomTree International and Global X go up and down completely randomly.

Pair Corralation between WisdomTree International and Global X

Considering the 90-day investment horizon WisdomTree International High is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree International High is 1.87 times less risky than Global X. The etf trades about -0.11 of its potential returns per unit of risk. The Global X MSCI is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,398  in Global X MSCI on September 15, 2024 and sell it today you would earn a total of  87.00  from holding Global X MSCI or generate 3.63% return on investment over 90 days.

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

WisdomTree International High  vs.  Global X MSCI

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Global X MSCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree International and Global X

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

The idea behind WisdomTree International High and Global X MSCI 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.