Correlation Between IShares MSCI and WisdomTree Dynamic
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and WisdomTree Dynamic 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 IShares MSCI and WisdomTree Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and WisdomTree Dynamic Currency, you can compare the effects of market volatilities on IShares MSCI and WisdomTree Dynamic 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 IShares MSCI with a short position of WisdomTree Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and WisdomTree Dynamic.
Diversification Opportunities for IShares MSCI and WisdomTree Dynamic
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and WisdomTree Dynamic Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Dynamic and IShares MSCI 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 iShares MSCI EAFE are associated (or correlated) with WisdomTree Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Dynamic has no effect on the direction of IShares MSCI i.e., IShares MSCI and WisdomTree Dynamic go up and down completely randomly.
Pair Corralation between IShares MSCI and WisdomTree Dynamic
Considering the 90-day investment horizon iShares MSCI EAFE is expected to generate 1.11 times more return on investment than WisdomTree Dynamic. However, IShares MSCI is 1.11 times more volatile than WisdomTree Dynamic Currency. It trades about 0.08 of its potential returns per unit of risk. WisdomTree Dynamic Currency is currently generating about 0.08 per unit of risk. If you would invest 4,451 in iShares MSCI EAFE on March 20, 2025 and sell it today you would earn a total of 1,823 from holding iShares MSCI EAFE or generate 40.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI EAFE vs. WisdomTree Dynamic Currency
Performance |
| Timeline |
| iShares MSCI EAFE |
| WisdomTree Dynamic |
IShares MSCI and WisdomTree Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and WisdomTree Dynamic
The main advantage of trading using opposite IShares MSCI and WisdomTree Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, WisdomTree Dynamic 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 Dynamic will offset losses from the drop in WisdomTree Dynamic's long position.| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. WisdomTree International SmallCap | IShares MSCI vs. iShares Russell Mid Cap | IShares MSCI vs. iShares Micro Cap ETF |
| WisdomTree Dynamic vs. WisdomTree Dynamic Currency | WisdomTree Dynamic vs. WisdomTree International Hedged | WisdomTree Dynamic vs. Xtrackers MSCI All | WisdomTree Dynamic vs. WisdomTree Europe Quality |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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