Correlation Between WisdomTree Trust and WisdomTree Emerging

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

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

Diversification Opportunities for WisdomTree Trust and WisdomTree Emerging

0.74

Correlation Coefficient

WisdomTree Trust  WisdomTree Emerging

Poor diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and WisdomTree Emerging Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and WisdomTree Trust 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 Trust 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 WisdomTree Trust i.e., WisdomTree Trust and WisdomTree Emerging go up and down completely randomly.

Pair Corralation between WisdomTree Trust and WisdomTree Emerging

Given the investment horizon of 90 days WisdomTree Trust is expected to generate 1.65 times more return on investment than WisdomTree Emerging. However, WisdomTree Trust is 1.65 times more volatile than WisdomTree Emerging Currency. It trades about 0.19 of its potential returns per unit of risk. WisdomTree Emerging Currency is currently generating about 0.09 per unit of risk. If you would invest  10,573  in WisdomTree Trust on April 30, 2025 and sell it today you would earn a total of  827.00  from holding WisdomTree Trust or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

WisdomTree Trust   vs.  WisdomTree Emerging Currency

WisdomTree Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, WisdomTree Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

WisdomTree Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Currency are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, WisdomTree Emerging is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WisdomTree Trust and WisdomTree Emerging

The main advantage of trading using opposite WisdomTree Trust and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Trust 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.

The idea behind WisdomTree Trust and WisdomTree Emerging Currency 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.