Correlation Between WisdomTree Emerging and Global X
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on WisdomTree Emerging and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Global X.
Diversification Opportunities for WisdomTree Emerging and Global X
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Global X go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and Global X
Considering the 90-day investment horizon WisdomTree Emerging is expected to generate 1.88 times less return on investment than Global X. But when comparing it to its historical volatility, WisdomTree Emerging Markets is 1.08 times less risky than Global X. It trades about 0.06 of its potential returns per unit of risk. Global X Funds is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,943 in Global X Funds on July 18, 2025 and sell it today you would earn a total of 174.00 from holding Global X Funds or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. Global X Funds
Performance |
| Timeline |
| WisdomTree Emerging |
| Global X Funds |
WisdomTree Emerging and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and Global X
The main advantage of trading using opposite WisdomTree Emerging and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind WisdomTree Emerging Markets and Global X Funds 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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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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