Correlation Between Proshares Russell and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Proshares Russell and WisdomTree Japan 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 Proshares Russell and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proshares Russell 2000 and WisdomTree Japan Hedged, you can compare the effects of market volatilities on Proshares Russell and WisdomTree Japan 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 Proshares Russell with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and WisdomTree Japan.
Diversification Opportunities for Proshares Russell and WisdomTree Japan
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Proshares and WisdomTree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and WisdomTree Japan Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan Hedged and Proshares Russell 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 Proshares Russell 2000 are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan Hedged has no effect on the direction of Proshares Russell i.e., Proshares Russell and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Proshares Russell and WisdomTree Japan
Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 0.88 times more return on investment than WisdomTree Japan. However, Proshares Russell 2000 is 1.13 times less risky than WisdomTree Japan. It trades about 0.04 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.01 per unit of risk. If you would invest 3,424 in Proshares Russell 2000 on March 15, 2025 and sell it today you would earn a total of 143.00 from holding Proshares Russell 2000 or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proshares Russell 2000 vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| Proshares Russell 2000 |
| WisdomTree Japan Hedged |
Proshares Russell and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proshares Russell and WisdomTree Japan
The main advantage of trading using opposite Proshares Russell and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell position performs unexpectedly, WisdomTree Japan 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 Japan will offset losses from the drop in WisdomTree Japan's long position.| Proshares Russell vs. Global X Dow | Proshares Russell vs. AdvisorShares STAR Global | Proshares Russell vs. Global X Funds | Proshares Russell vs. FT Vest Dow |
| WisdomTree Japan vs. WisdomTree Europe Hedged | WisdomTree Japan vs. WisdomTree Japan SmallCap | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. iShares MSCI Japan |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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