Correlation Between WisdomTree International and Vulcan Value

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

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

Diversification Opportunities for WisdomTree International and Vulcan Value

0.73

Correlation Coefficient

WisdomTree International  Vulcan Value

Poor diversification

The 3 months correlation between WisdomTree and Vulcan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Large and Vulcan Value Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Value Partners and WisdomTree International 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 International LargeCap are associated (or correlated) with Vulcan Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Value Partners has no effect on the direction of WisdomTree International i.e., WisdomTree International and Vulcan Value go up and down completely randomly.

Pair Corralation between WisdomTree International and Vulcan Value

Considering the 90-day investment horizon WisdomTree International is expected to generate 1.9 times less return on investment than Vulcan Value. But when comparing it to its historical volatility, WisdomTree International LargeCap is 1.34 times less risky than Vulcan Value. It trades about 0.14 of its potential returns per unit of risk. Vulcan Value Partners is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,665  in Vulcan Value Partners on April 30, 2025 and sell it today you would earn a total of  318.00  from holding Vulcan Value Partners or generate 11.93% return on investment over 90 days.

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

WisdomTree International Large  vs.  Vulcan Value Partners

WisdomTree International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International LargeCap are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, WisdomTree International is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Vulcan Value Partners

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Value Partners are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Vulcan Value may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with WisdomTree International and Vulcan Value

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

The idea behind WisdomTree International LargeCap and Vulcan Value Partners 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.