Correlation Between IShares Trust and WisdomTree BioRevolution

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

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

Diversification Opportunities for IShares Trust and WisdomTree BioRevolution

0.47

Correlation Coefficient

IShares Trust  WisdomTree BioRevolution

Very weak diversification

The 3 months correlation between IShares and WisdomTree is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and WisdomTree BioRevolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree BioRevolution and IShares 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 iShares Trust are associated (or correlated) with WisdomTree BioRevolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree BioRevolution has no effect on the direction of IShares Trust i.e., IShares Trust and WisdomTree BioRevolution go up and down completely randomly.

Pair Corralation between IShares Trust and WisdomTree BioRevolution

Given the investment horizon of 90 days IShares Trust is expected to generate 6.67 times less return on investment than WisdomTree BioRevolution. But when comparing it to its historical volatility, iShares Trust is 6.28 times less risky than WisdomTree BioRevolution. It trades about 0.14 of its potential returns per unit of risk. WisdomTree BioRevolution is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,249  in WisdomTree BioRevolution on May 18, 2025 and sell it today you would earn a total of  202.00  from holding WisdomTree BioRevolution or generate 16.17% return on investment over 90 days.

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

iShares Trust   vs.  WisdomTree BioRevolution

iShares Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WisdomTree BioRevolution

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree BioRevolution are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, WisdomTree BioRevolution sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Trust and WisdomTree BioRevolution

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

The idea behind iShares Trust and WisdomTree BioRevolution 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.