Correlation Between IREIT MarketVector and WisdomTree Japan

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

By analyzing existing cross correlation between iREIT MarketVector and WisdomTree Japan SmallCap, you can compare the effects of market volatilities on IREIT MarketVector 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 IREIT MarketVector with a short position of WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and WisdomTree Japan.

Diversification Opportunities for IREIT MarketVector and WisdomTree Japan

0.82

Correlation Coefficient

IREIT MarketVector  WisdomTree Japan

Very poor diversification

The 3 months correlation between IREIT and WisdomTree is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector and WisdomTree Japan SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan SmallCap and IREIT MarketVector 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 iREIT MarketVector 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 SmallCap has no effect on the direction of IREIT MarketVector i.e., IREIT MarketVector and WisdomTree Japan go up and down completely randomly.

Pair Corralation between IREIT MarketVector and WisdomTree Japan

Given the investment horizon of 90 days IREIT MarketVector is expected to generate 1.97 times less return on investment than WisdomTree Japan. In addition to that, IREIT MarketVector is 1.42 times more volatile than WisdomTree Japan SmallCap. It trades about 0.05 of its total potential returns per unit of risk. WisdomTree Japan SmallCap is currently generating about 0.15 per unit of volatility. If you would invest  8,123  in WisdomTree Japan SmallCap on May 3, 2025 and sell it today you would earn a total of  576.00  from holding WisdomTree Japan SmallCap or generate 7.09% return on investment over 90 days.

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

iREIT MarketVector  vs.  WisdomTree Japan SmallCap

iREIT MarketVector

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iREIT MarketVector are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, IREIT MarketVector is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree Japan SmallCap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Japan SmallCap are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, WisdomTree Japan may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IREIT MarketVector and WisdomTree Japan

The main advantage of trading using opposite IREIT MarketVector and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector 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.

The idea behind iREIT MarketVector and WisdomTree Japan SmallCap 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.