Correlation Between WisdomTree Yield and IShares Agency
Can any of the company-specific risk be diversified away by investing in both WisdomTree Yield and IShares Agency 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 WisdomTree Yield and IShares Agency into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Yield Enhanced and iShares Agency Bond, you can compare the effects of market volatilities on WisdomTree Yield and IShares Agency 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 WisdomTree Yield with a short position of IShares Agency. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Yield and IShares Agency.
Diversification Opportunities for WisdomTree Yield and IShares Agency
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Yield Enhanced and iShares Agency Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Agency Bond and WisdomTree Yield 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 WisdomTree Yield Enhanced are associated (or correlated) with IShares Agency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Agency Bond has no effect on the direction of WisdomTree Yield i.e., WisdomTree Yield and IShares Agency go up and down completely randomly.
Pair Corralation between WisdomTree Yield and IShares Agency
Given the investment horizon of 90 days WisdomTree Yield is expected to generate 1.21 times less return on investment than IShares Agency. But when comparing it to its historical volatility, WisdomTree Yield Enhanced is 1.65 times less risky than IShares Agency. It trades about 0.19 of its potential returns per unit of risk. iShares Agency Bond is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 10,887 in iShares Agency Bond on September 4, 2025 and sell it today you would earn a total of 138.00 from holding iShares Agency Bond or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Yield Enhanced vs. iShares Agency Bond
Performance |
| Timeline |
| WisdomTree Yield Enhanced |
| iShares Agency Bond |
WisdomTree Yield and IShares Agency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Yield and IShares Agency
The main advantage of trading using opposite WisdomTree Yield and IShares Agency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Yield position performs unexpectedly, IShares Agency 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 IShares Agency will offset losses from the drop in IShares Agency's long position.| WisdomTree Yield vs. Valued Advisers Trust | WisdomTree Yield vs. Columbia Diversified Fixed | WisdomTree Yield vs. Principal Exchange Traded Funds | WisdomTree Yield vs. MFS Active Core |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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