Correlation Between WisdomTree Japan and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and WisdomTree Japan 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 Japan and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Japan SmallCap and WisdomTree Japan Hedged, you can compare the effects of market volatilities on WisdomTree Japan and WisdomTree Japan 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 Japan with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and WisdomTree Japan.
Diversification Opportunities for WisdomTree Japan and WisdomTree Japan
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and WisdomTree is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan SmallCap and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged and WisdomTree Japan 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 Japan SmallCap are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and WisdomTree Japan go up and down completely randomly.
Pair Corralation between WisdomTree Japan and WisdomTree Japan
Considering the 90-day investment horizon WisdomTree Japan SmallCap is expected to generate 0.96 times more return on investment than WisdomTree Japan. However, WisdomTree Japan SmallCap is 1.04 times less risky than WisdomTree Japan. It trades about 0.25 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.08 per unit of risk. If you would invest 8,367 in WisdomTree Japan SmallCap on May 24, 2025 and sell it today you would earn a total of 1,031 from holding WisdomTree Japan SmallCap or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.16% |
| Values | Daily Returns |
WisdomTree Japan SmallCap vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| WisdomTree Japan SmallCap |
Risk-Adjusted Performance
Solid
Weak | Strong |
| WisdomTree Japan Hedged |
Risk-Adjusted Performance
Mild
Weak | Strong |
WisdomTree Japan and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and WisdomTree Japan
The main advantage of trading using opposite WisdomTree Japan and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan's long position.| WisdomTree Japan vs. WisdomTree Global ex US | WisdomTree Japan vs. WisdomTree International MidCap | WisdomTree Japan vs. WisdomTree Global High | WisdomTree Japan vs. WisdomTree Japan Hedged |
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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.
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