Correlation Between WisdomTree Managed and Dimensional International

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

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

Diversification Opportunities for WisdomTree Managed and Dimensional International

-0.63

Correlation Coefficient

WisdomTree Managed  Dimensional International

Excellent diversification

The 3 months correlation between WisdomTree and Dimensional is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and WisdomTree Managed 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 Managed Futures are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and Dimensional International go up and down completely randomly.

Pair Corralation between WisdomTree Managed and Dimensional International

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to generate 1.17 times more return on investment than Dimensional International. However, WisdomTree Managed is 1.17 times more volatile than Dimensional International High. It trades about 0.05 of its potential returns per unit of risk. Dimensional International High is currently generating about -0.15 per unit of risk. If you would invest  3,477  in WisdomTree Managed Futures on September 20, 2024 and sell it today you would earn a total of  94.00  from holding WisdomTree Managed Futures or generate 2.7% return on investment over 90 days.

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

WisdomTree Managed Futures  vs.  Dimensional International High

WisdomTree Managed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree Managed is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dimensional International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional International High has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Etf's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with WisdomTree Managed and Dimensional International

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

The idea behind WisdomTree Managed Futures and Dimensional International High 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.