Correlation Between WisdomTree Efficient and WisdomTree Emerging

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

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

Diversification Opportunities for WisdomTree Efficient and WisdomTree Emerging

0.96

Correlation Coefficient

WisdomTree Efficient  WisdomTree Emerging

Almost no diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Efficient Gold and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and WisdomTree Efficient 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 Efficient Gold are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of WisdomTree Efficient i.e., WisdomTree Efficient and WisdomTree Emerging go up and down completely randomly.

Pair Corralation between WisdomTree Efficient and WisdomTree Emerging

Considering the 90-day investment horizon WisdomTree Efficient Gold is expected to generate 1.27 times more return on investment than WisdomTree Emerging. However, WisdomTree Efficient is 1.27 times more volatile than WisdomTree Emerging Markets. It trades about 0.33 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.19 per unit of risk. If you would invest  4,779  in WisdomTree Efficient Gold on July 16, 2025 and sell it today you would earn a total of  1,250  from holding WisdomTree Efficient Gold or generate 26.16% return on investment over 90 days.

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

WisdomTree Efficient Gold  vs.  WisdomTree Emerging Markets

WisdomTree Efficient Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Efficient Gold are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, WisdomTree Efficient exhibited solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, WisdomTree Emerging may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with WisdomTree Efficient and WisdomTree Emerging

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

The idea behind WisdomTree Efficient Gold and WisdomTree Emerging Markets 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.