Correlation Between WisdomTree Emerging and DBX ETF

Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and DBX ETF 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 Emerging and DBX ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree Emerging Markets and DBX ETF Trust, you can compare the effects of market volatilities on WisdomTree Emerging and DBX ETF 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 Emerging with a short position of DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and DBX ETF.

Diversification Opportunities for WisdomTree Emerging and DBX ETF

0.92

Correlation Coefficient

WisdomTree Emerging  DBX ETF

Almost no diversification

The 3 months correlation between WisdomTree and DBX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX ETF Trust and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and DBX ETF go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and DBX ETF

Considering the 90-day investment horizon WisdomTree Emerging Markets is expected to generate 0.79 times more return on investment than DBX ETF. However, WisdomTree Emerging Markets is 1.27 times less risky than DBX ETF. It trades about 0.15 of its potential returns per unit of risk. DBX ETF Trust is currently generating about 0.1 per unit of risk. If you would invest  4,551  in WisdomTree Emerging Markets on February 6, 2024 and sell it today you would earn a total of  671.00  from holding WisdomTree Emerging Markets or generate 14.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

WisdomTree Emerging Markets  vs.  DBX ETF Trust

WisdomTree Emerging

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, WisdomTree Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

DBX ETF Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DBX ETF Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DBX ETF may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with WisdomTree Emerging and DBX ETF

The main advantage of trading using opposite WisdomTree Emerging and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, DBX ETF 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 DBX ETF will offset losses from the drop in DBX ETF's long position.

The idea behind WisdomTree Emerging Markets and DBX ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.