Correlation Between Main Sector and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both Main Sector and WisdomTree International 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 Main Sector and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Sector Rotation and WisdomTree International Hedged, you can compare the effects of market volatilities on Main Sector and WisdomTree International 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 Main Sector with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Sector and WisdomTree International.
Diversification Opportunities for Main Sector and WisdomTree International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Main and WisdomTree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Main Sector Rotation and WisdomTree International Hedge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and Main Sector 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 Main Sector Rotation are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of Main Sector i.e., Main Sector and WisdomTree International go up and down completely randomly.
Pair Corralation between Main Sector and WisdomTree International
Given the investment horizon of 90 days Main Sector is expected to generate 2.94 times less return on investment than WisdomTree International. In addition to that, Main Sector is 1.25 times more volatile than WisdomTree International Hedged. It trades about 0.06 of its total potential returns per unit of risk. WisdomTree International Hedged is currently generating about 0.21 per unit of volatility. If you would invest 4,695 in WisdomTree International Hedged on October 20, 2025 and sell it today you would earn a total of 402.00 from holding WisdomTree International Hedged or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Sector Rotation vs. WisdomTree International Hedge
Performance |
| Timeline |
| Main Sector Rotation |
| WisdomTree International |
Main Sector and WisdomTree International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Sector and WisdomTree International
The main advantage of trading using opposite Main Sector and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Sector position performs unexpectedly, WisdomTree International 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 International will offset losses from the drop in WisdomTree International's long position.| Main Sector vs. Franklin FTSE India | Main Sector vs. SPDR SP 500 | Main Sector vs. Fidelity MSCI Financials | Main Sector vs. Amplify Junior Silver |
| WisdomTree International vs. WisdomTree Emerging Markets | WisdomTree International vs. iShares MSCI USA | WisdomTree International vs. Amplify Junior Silver | WisdomTree International vs. SPDR SP 400 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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