Correlation Between WisdomTree Europe and WisdomTree Global
Can any of the company-specific risk be diversified away by investing in both WisdomTree Europe and WisdomTree Global 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 Europe and WisdomTree Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Europe SmallCap and WisdomTree Global High, you can compare the effects of market volatilities on WisdomTree Europe and WisdomTree Global 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 Europe with a short position of WisdomTree Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Europe and WisdomTree Global.
Diversification Opportunities for WisdomTree Europe and WisdomTree Global
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Europe SmallCap and WisdomTree Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global High and WisdomTree Europe 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 Europe SmallCap are associated (or correlated) with WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global High has no effect on the direction of WisdomTree Europe i.e., WisdomTree Europe and WisdomTree Global go up and down completely randomly.
Pair Corralation between WisdomTree Europe and WisdomTree Global
Considering the 90-day investment horizon WisdomTree Europe SmallCap is expected to generate 1.38 times more return on investment than WisdomTree Global. However, WisdomTree Europe is 1.38 times more volatile than WisdomTree Global High. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Global High is currently generating about 0.07 per unit of risk. If you would invest 5,249 in WisdomTree Europe SmallCap on March 24, 2025 and sell it today you would earn a total of 1,601 from holding WisdomTree Europe SmallCap or generate 30.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Europe SmallCap vs. WisdomTree Global High
Performance |
| Timeline |
| WisdomTree Europe |
| WisdomTree Global High |
WisdomTree Europe and WisdomTree Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Europe and WisdomTree Global
The main advantage of trading using opposite WisdomTree Europe and WisdomTree Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Europe position performs unexpectedly, WisdomTree Global 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 Global will offset losses from the drop in WisdomTree Global's long position.| WisdomTree Europe vs. WisdomTree International MidCap | WisdomTree Europe vs. WisdomTree Global High | WisdomTree Europe vs. WisdomTree International SmallCap | WisdomTree Europe vs. WisdomTree Japan SmallCap |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |