Correlation Between WisdomTree Japan and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan and WisdomTree International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Japan Hedged and WisdomTree International MidCap, you can compare the effects of market volatilities on WisdomTree Japan and WisdomTree International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and WisdomTree International.
Diversification Opportunities for WisdomTree Japan and WisdomTree International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and WisdomTree International MidCa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International 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 Hedged are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of WisdomTree Japan i.e., WisdomTree Japan and WisdomTree International go up and down completely randomly.
Pair Corralation between WisdomTree Japan and WisdomTree International
Considering the 90-day investment horizon WisdomTree Japan Hedged is expected to generate 1.39 times more return on investment than WisdomTree International. However, WisdomTree Japan is 1.39 times more volatile than WisdomTree International MidCap. It trades about 0.39 of its potential returns per unit of risk. WisdomTree International MidCap is currently generating about 0.5 per unit of risk. If you would invest 13,493 in WisdomTree Japan Hedged on September 21, 2025 and sell it today you would earn a total of 965.00 from holding WisdomTree Japan Hedged or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. WisdomTree International MidCa
Performance |
| Timeline |
| WisdomTree Japan Hedged |
| WisdomTree International |
WisdomTree Japan and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and WisdomTree International
The main advantage of trading using opposite WisdomTree Japan and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan position performs unexpectedly, WisdomTree International 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 International will offset losses from the drop in WisdomTree International's long position.| WisdomTree Japan vs. Pacer Small Cap | WisdomTree Japan vs. WisdomTree MidCap Dividend | WisdomTree Japan vs. iShares Financials ETF | WisdomTree Japan vs. SPDR SP 600 |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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