Correlation Between IShares Core and WisdomTree Earnings

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

By analyzing existing cross correlation between iShares Core Dividend and WisdomTree Earnings 500, you can compare the effects of market volatilities on IShares Core and WisdomTree Earnings 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 IShares Core with a short position of WisdomTree Earnings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and WisdomTree Earnings.

Diversification Opportunities for IShares Core and WisdomTree Earnings

0.76

Correlation Coefficient

IShares Core  WisdomTree Earnings

Poor diversification

The 3 months correlation between IShares and WisdomTree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Dividend and WisdomTree Earnings 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Earnings 500 and IShares Core 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 iShares Core Dividend are associated (or correlated) with WisdomTree Earnings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Earnings 500 has no effect on the direction of IShares Core i.e., IShares Core and WisdomTree Earnings go up and down completely randomly.

Pair Corralation between IShares Core and WisdomTree Earnings

Given the investment horizon of 90 days IShares Core is expected to generate 1.4 times less return on investment than WisdomTree Earnings. But when comparing it to its historical volatility, iShares Core Dividend is 1.15 times less risky than WisdomTree Earnings. It trades about 0.07 of its potential returns per unit of risk. WisdomTree Earnings 500 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,815  in WisdomTree Earnings 500 on September 11, 2025 and sell it today you would earn a total of  254.00  from holding WisdomTree Earnings 500 or generate 3.73% return on investment over 90 days.

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

iShares Core Dividend  vs.  WisdomTree Earnings 500

iShares Core Dividend

Risk-Adjusted Performance

Mild

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

WisdomTree Earnings 500

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Earnings 500 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WisdomTree Earnings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and WisdomTree Earnings

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

The idea behind iShares Core Dividend and WisdomTree Earnings 500 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.