Correlation Between Global X and WisdomTree International

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

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

Diversification Opportunities for Global X and WisdomTree International

0.87

Correlation Coefficient

Global X  WisdomTree International

Very poor diversification

The 3 months correlation between Global and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and WisdomTree International Al in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and Global X 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 Global X Funds are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Global X i.e., Global X and WisdomTree International go up and down completely randomly.

Pair Corralation between Global X and WisdomTree International

Given the investment horizon of 90 days Global X Funds is expected to generate 1.64 times more return on investment than WisdomTree International. However, Global X is 1.64 times more volatile than WisdomTree International Al. It trades about 0.11 of its potential returns per unit of risk. WisdomTree International Al is currently generating about 0.08 per unit of risk. If you would invest  3,918  in Global X Funds on November 28, 2024 and sell it today you would earn a total of  286.00  from holding Global X Funds or generate 7.3% return on investment over 90 days.

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

Global X Funds  vs.  WisdomTree International Al

Global X Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in March 2025.

WisdomTree International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Al are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, WisdomTree International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global X and WisdomTree International

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

The idea behind Global X Funds and WisdomTree International Al 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.