Correlation Between IShares MSCI and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and WisdomTree Europe 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 IShares MSCI and WisdomTree Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Eurozone and WisdomTree Europe Hedged, you can compare the effects of market volatilities on IShares MSCI and WisdomTree Europe 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 IShares MSCI with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and WisdomTree Europe.
Diversification Opportunities for IShares MSCI and WisdomTree Europe
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and WisdomTree is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Eurozone and WisdomTree Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Hedged and IShares MSCI 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 iShares MSCI Eurozone are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Hedged has no effect on the direction of IShares MSCI i.e., IShares MSCI and WisdomTree Europe go up and down completely randomly.
Pair Corralation between IShares MSCI and WisdomTree Europe
Considering the 90-day investment horizon iShares MSCI Eurozone is expected to under-perform the WisdomTree Europe. In addition to that, IShares MSCI is 1.31 times more volatile than WisdomTree Europe Hedged. It trades about -0.1 of its total potential returns per unit of risk. WisdomTree Europe Hedged is currently generating about -0.07 per unit of volatility. If you would invest 4,797 in WisdomTree Europe Hedged on January 26, 2024 and sell it today you would lose (53.00) from holding WisdomTree Europe Hedged or give up 1.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
iShares MSCI Eurozone vs. WisdomTree Europe Hedged
Performance |
Timeline |
iShares MSCI Eurozone |
WisdomTree Europe Hedged |
IShares MSCI and WisdomTree Europe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and WisdomTree Europe
The main advantage of trading using opposite IShares MSCI and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.IShares MSCI vs. OShares Small Cap Quality | IShares MSCI vs. OShares Quality Dividend | IShares MSCI vs. OShares Global Internet | IShares MSCI vs. Virtus Terranova Quality |
WisdomTree Europe vs. OShares Small Cap Quality | WisdomTree Europe vs. OShares Quality Dividend | WisdomTree Europe vs. OShares Global Internet | WisdomTree Europe vs. Virtus Terranova Quality |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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