Correlation Between IShares Financials and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both IShares Financials 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 IShares Financials and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Financials ETF and WisdomTree Emerging Markets, you can compare the effects of market volatilities on IShares Financials 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 IShares Financials with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Financials and WisdomTree Emerging.
Diversification Opportunities for IShares Financials and WisdomTree Emerging
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and WisdomTree is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding iShares Financials ETF and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and IShares Financials 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 Financials ETF 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 IShares Financials i.e., IShares Financials and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between IShares Financials and WisdomTree Emerging
Considering the 90-day investment horizon iShares Financials ETF is expected to generate 1.35 times more return on investment than WisdomTree Emerging. However, IShares Financials is 1.35 times more volatile than WisdomTree Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.07 per unit of risk. If you would invest 12,660 in iShares Financials ETF on September 28, 2025 and sell it today you would earn a total of 425.00 from holding iShares Financials ETF or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Financials ETF vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| iShares Financials ETF |
| WisdomTree Emerging |
IShares Financials and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Financials and WisdomTree Emerging
The main advantage of trading using opposite IShares Financials and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Financials 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.| IShares Financials vs. SPDR SP 600 | IShares Financials vs. WisdomTree Japan Hedged | IShares Financials vs. iShares Exponential Technologies | IShares Financials vs. WisdomTree MidCap Dividend |
| WisdomTree Emerging vs. WisdomTree MidCap Dividend | WisdomTree Emerging vs. iShares Home Construction | WisdomTree Emerging vs. iShares MSCI All | WisdomTree Emerging vs. WisdomTree India Earnings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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