Correlation Between Dimensional ETF and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF 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 Dimensional ETF and WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and WisdomTree Japan Hedged, you can compare the effects of market volatilities on Dimensional ETF 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 Dimensional ETF with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and WisdomTree Japan.
Diversification Opportunities for Dimensional ETF and WisdomTree Japan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dimensional and WisdomTree is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust 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 Dimensional ETF 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 Dimensional ETF Trust 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 Dimensional ETF i.e., Dimensional ETF and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Dimensional ETF and WisdomTree Japan
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 0.89 times more return on investment than WisdomTree Japan. However, Dimensional ETF Trust is 1.12 times less risky than WisdomTree Japan. It trades about 0.32 of its potential returns per unit of risk. WisdomTree Japan Hedged is currently generating about 0.13 per unit of risk. If you would invest 2,640 in Dimensional ETF Trust on April 23, 2025 and sell it today you would earn a total of 431.00 from holding Dimensional ETF Trust or generate 16.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 82.26% |
Values | Daily Returns |
Dimensional ETF Trust vs. WisdomTree Japan Hedged
Performance |
Timeline |
Dimensional ETF Trust |
WisdomTree Japan Hedged |
Risk-Adjusted Performance
OK
Weak | Strong |
Dimensional ETF and WisdomTree Japan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dimensional ETF and WisdomTree Japan
The main advantage of trading using opposite Dimensional ETF and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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.Dimensional ETF vs. Vanguard FTSE Emerging | Dimensional ETF vs. iShares Core MSCI | Dimensional ETF vs. Global X Funds | Dimensional ETF vs. iShares MSCI Emerging |
WisdomTree Japan vs. WisdomTree Emerging Markets | WisdomTree Japan vs. WisdomTree SmallCap Quality | WisdomTree Japan vs. First Trust Emerging | WisdomTree Japan vs. First Trust Japan |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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