Correlation Between SPDR Portfolio and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio 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 SPDR Portfolio and WisdomTree China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Emerging and WisdomTree China ex State Owned, you can compare the effects of market volatilities on SPDR Portfolio 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 SPDR Portfolio with a short position of WisdomTree China. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and WisdomTree China.
Diversification Opportunities for SPDR Portfolio and WisdomTree China
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Emerging 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 SPDR Portfolio 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 SPDR Portfolio Emerging 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 SPDR Portfolio i.e., SPDR Portfolio and WisdomTree China go up and down completely randomly.
Pair Corralation between SPDR Portfolio and WisdomTree China
Given the investment horizon of 90 days SPDR Portfolio Emerging is expected to under-perform the WisdomTree China. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Portfolio Emerging is 2.21 times less risky than WisdomTree China. The etf trades about -0.01 of its potential returns per unit of risk. The WisdomTree China ex State Owned is currently generating about 0.1 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 327.00 from holding WisdomTree China ex State Owned or generate 10.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
SPDR Portfolio Emerging vs. WisdomTree China ex State Owne
Performance |
Timeline |
SPDR Portfolio Emerging |
WisdomTree China |
SPDR Portfolio and WisdomTree China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Portfolio and WisdomTree China
The main advantage of trading using opposite SPDR Portfolio and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio 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.SPDR Portfolio vs. SPDR SP World | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Russell Small |
WisdomTree China vs. Global X MSCI | WisdomTree China vs. WisdomTree Emerging Markets | WisdomTree China vs. Invesco China Technology | WisdomTree China vs. iShares MSCI China |
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 Stocks Directory module to find actively traded stocks across global markets.
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