Correlation Between SPDR SP and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 600 and WisdomTree Japan Hedged, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and WisdomTree Japan.
Diversification Opportunities for SPDR SP and WisdomTree Japan
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and WisdomTree is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 600 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 SPDR SP 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 SPDR SP 600 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 SPDR SP i.e., SPDR SP and WisdomTree Japan go up and down completely randomly.
Pair Corralation between SPDR SP and WisdomTree Japan
Given the investment horizon of 90 days SPDR SP is expected to generate 1.5 times less return on investment than WisdomTree Japan. In addition to that, SPDR SP is 1.36 times more volatile than WisdomTree Japan Hedged. It trades about 0.15 of its total potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.31 per unit of volatility. If you would invest 13,293 in WisdomTree Japan Hedged on October 18, 2025 and sell it today you would earn a total of 2,252 from holding WisdomTree Japan Hedged or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 600 vs. WisdomTree Japan Hedged
Performance |
| Timeline |
| SPDR SP 600 |
| WisdomTree Japan Hedged |
SPDR SP and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and WisdomTree Japan
The main advantage of trading using opposite SPDR SP and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. Invesco SP MidCap | SPDR SP vs. Invesco SP SmallCap | SPDR SP vs. Invesco SP MidCap | SPDR SP vs. VictoryShares International Value |
| WisdomTree Japan vs. Pacer Small Cap | WisdomTree Japan vs. WisdomTree MidCap Dividend | WisdomTree Japan vs. iShares Financials ETF | WisdomTree Japan vs. SPDR SP 600 |
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 Directory module to find actively traded commodities issued by global exchanges.
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