Correlation Between WisdomTree Emerging and Bank of New York

Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and Bank of New York 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 Bank of New York 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 The Bank of, you can compare the effects of market volatilities on WisdomTree Emerging and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Bank of New York.

Diversification Opportunities for WisdomTree Emerging and Bank of New York

0.67

Correlation Coefficient

WisdomTree Emerging  Bank of New York

Poor diversification

The 3 months correlation between WisdomTree and Bank is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of New York 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 Bank of New York. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of New York has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Bank of New York go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and Bank of New York

Considering the 90-day investment horizon WisdomTree Emerging Markets is expected to generate 0.62 times more return on investment than Bank of New York. However, WisdomTree Emerging Markets is 1.62 times less risky than Bank of New York. It trades about 0.07 of its potential returns per unit of risk. The Bank of is currently generating about 0.03 per unit of risk. If you would invest  4,189  in WisdomTree Emerging Markets on February 21, 2025 and sell it today you would earn a total of  212.00  from holding WisdomTree Emerging Markets or generate 5.06% return on investment over 90 days.

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

WisdomTree Emerging Markets  vs.  The Bank of

WisdomTree Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, WisdomTree Emerging is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Bank of New York

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bank of New York is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with WisdomTree Emerging and Bank of New York

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

The idea behind WisdomTree Emerging Markets and The Bank of 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.