Correlation Between WisdomTree International and Martin Currie

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

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

Diversification Opportunities for WisdomTree International and Martin Currie

0.96

Correlation Coefficient

WisdomTree International  Martin Currie

Almost no diversification

The 3 months correlation between WisdomTree and Martin is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Quali and Martin Currie Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Currie Sustainable 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 Quality are associated (or correlated) with Martin Currie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Currie Sustainable has no effect on the direction of WisdomTree International i.e., WisdomTree International and Martin Currie go up and down completely randomly.

Pair Corralation between WisdomTree International and Martin Currie

Given the investment horizon of 90 days WisdomTree International Quality is expected to generate 0.76 times more return on investment than Martin Currie. However, WisdomTree International Quality is 1.32 times less risky than Martin Currie. It trades about -0.07 of its potential returns per unit of risk. Martin Currie Sustainable is currently generating about -0.07 per unit of risk. If you would invest  3,811  in WisdomTree International Quality on September 13, 2024 and sell it today you would lose (161.00) from holding WisdomTree International Quality or give up 4.22% of portfolio value over 90 days.

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

WisdomTree International Quali  vs.  Martin Currie Sustainable

WisdomTree International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree International Quality has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, WisdomTree International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Martin Currie Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Currie Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Martin Currie is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree International and Martin Currie

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

The idea behind WisdomTree International Quality and Martin Currie Sustainable 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.