Correlation Between SPDR EURO and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both SPDR EURO and WisdomTree Europe 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 SPDR EURO and WisdomTree Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR EURO STOXX and WisdomTree Europe Quality, you can compare the effects of market volatilities on SPDR EURO and WisdomTree Europe 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 SPDR EURO with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR EURO and WisdomTree Europe.
Diversification Opportunities for SPDR EURO and WisdomTree Europe
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and WisdomTree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SPDR EURO STOXX and WisdomTree Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Quality and SPDR EURO 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 SPDR EURO STOXX are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Quality has no effect on the direction of SPDR EURO i.e., SPDR EURO and WisdomTree Europe go up and down completely randomly.
Pair Corralation between SPDR EURO and WisdomTree Europe
Considering the 90-day investment horizon SPDR EURO is expected to generate 1.38 times less return on investment than WisdomTree Europe. In addition to that, SPDR EURO is 1.08 times more volatile than WisdomTree Europe Quality. It trades about 0.11 of its total potential returns per unit of risk. WisdomTree Europe Quality is currently generating about 0.16 per unit of volatility. If you would invest 3,596 in WisdomTree Europe Quality on October 25, 2025 and sell it today you would earn a total of 266.00 from holding WisdomTree Europe Quality or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR EURO STOXX vs. WisdomTree Europe Quality
Performance |
| Timeline |
| SPDR EURO STOXX |
| WisdomTree Europe Quality |
SPDR EURO and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR EURO and WisdomTree Europe
The main advantage of trading using opposite SPDR EURO and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR EURO position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.| SPDR EURO vs. WisdomTree MidCap Dividend | SPDR EURO vs. SPDR SP 600 | SPDR EURO vs. First Trust Dorsey | SPDR EURO vs. Vanguard Materials Index |
| WisdomTree Europe vs. First Trust Switzerland | WisdomTree Europe vs. Morgan Stanley ETF | WisdomTree Europe vs. Franklin FTSE Australia | WisdomTree Europe vs. Roundhill Sports Betting |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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