Correlation Between WisdomTree Emerging and JPMorgan International

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

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

Diversification Opportunities for WisdomTree Emerging and JPMorgan International

0.12

Correlation Coefficient

WisdomTree Emerging  JPMorgan International

Average diversification

The 3 months correlation between WisdomTree and JPMorgan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and JPMorgan International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and JPMorgan International go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and JPMorgan International

Allowing for the 90-day total investment horizon WisdomTree Emerging Markets is expected to under-perform the JPMorgan International. In addition to that, WisdomTree Emerging is 1.19 times more volatile than JPMorgan International Value. It trades about -0.04 of its total potential returns per unit of risk. JPMorgan International Value is currently generating about 0.17 per unit of volatility. If you would invest  5,638  in JPMorgan International Value on November 28, 2024 and sell it today you would earn a total of  398.00  from holding JPMorgan International Value or generate 7.06% return on investment over 90 days.

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

WisdomTree Emerging Markets  vs.  JPMorgan International Value

WisdomTree Emerging

Risk-Adjusted Performance

Very Weak

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

JPMorgan International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan International Value are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, JPMorgan International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with WisdomTree Emerging and JPMorgan International

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

The idea behind WisdomTree Emerging Markets and JPMorgan International Value 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.