Correlation Between MicroSectors FANG and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and WisdomTree Emerging 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 MicroSectors FANG and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and WisdomTree Emerging Markets, you can compare the effects of market volatilities on MicroSectors FANG and WisdomTree Emerging 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 MicroSectors FANG with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and WisdomTree Emerging.
Diversification Opportunities for MicroSectors FANG and WisdomTree Emerging
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and WisdomTree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between MicroSectors FANG and WisdomTree Emerging
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 2.47 times more return on investment than WisdomTree Emerging. However, MicroSectors FANG is 2.47 times more volatile than WisdomTree Emerging Markets. It trades about 0.14 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.18 per unit of risk. If you would invest 9,461 in MicroSectors FANG Index on May 24, 2025 and sell it today you would earn a total of 1,487 from holding MicroSectors FANG Index or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| MicroSectors FANG Index |
| WisdomTree Emerging |
MicroSectors FANG and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and WisdomTree Emerging
The main advantage of trading using opposite MicroSectors FANG and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, WisdomTree Emerging 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 Emerging will offset losses from the drop in WisdomTree Emerging's long position.| MicroSectors FANG vs. MicroSectors FANG ETN | MicroSectors FANG vs. Direxion Daily Dow | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Cnsmr |
| WisdomTree Emerging vs. WisdomTree China ex State Owned | WisdomTree Emerging vs. iShares ESG Aware | WisdomTree Emerging vs. SPDR Portfolio Emerging | WisdomTree Emerging vs. WisdomTree International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |