Correlation Between WisdomTree Managed and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both WisdomTree Managed and IShares MSCI 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 IShares MSCI 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 iShares MSCI Turkey, you can compare the effects of market volatilities on WisdomTree Managed and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Managed and IShares MSCI.

Diversification Opportunities for WisdomTree Managed and IShares MSCI

0.35

Correlation Coefficient

WisdomTree Managed  IShares MSCI

Weak diversification

The 3 months correlation between WisdomTree and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Managed Futures and iShares MSCI Turkey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Turkey 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Turkey has no effect on the direction of WisdomTree Managed i.e., WisdomTree Managed and IShares MSCI go up and down completely randomly.

Pair Corralation between WisdomTree Managed and IShares MSCI

Given the investment horizon of 90 days WisdomTree Managed Futures is expected to under-perform the IShares MSCI. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Managed Futures is 4.09 times less risky than IShares MSCI. The etf trades about -0.15 of its potential returns per unit of risk. The iShares MSCI Turkey is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3,490  in iShares MSCI Turkey on January 26, 2024 and sell it today you would earn a total of  368.00  from holding iShares MSCI Turkey or generate 10.54% return on investment over 90 days.

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

WisdomTree Managed Futures  vs.  iShares MSCI Turkey

WisdomTree Managed

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Managed Futures are ranked lower than 15 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares MSCI Turkey

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Turkey are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with WisdomTree Managed and IShares MSCI

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

The idea behind WisdomTree Managed Futures and iShares MSCI Turkey 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.