Correlation Between WisdomTree Trust and Global X

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

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

Diversification Opportunities for WisdomTree Trust and Global X

1.0

Correlation Coefficient

WisdomTree Trust  Global X

No risk reduction

The 3 months correlation between WisdomTree and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and Global X Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Artificial and WisdomTree 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 WisdomTree Trust are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Artificial has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and Global X go up and down completely randomly.

Pair Corralation between WisdomTree Trust and Global X

Given the investment horizon of 90 days WisdomTree Trust is expected to generate 1.28 times more return on investment than Global X. However, WisdomTree Trust is 1.28 times more volatile than Global X Artificial. It trades about 0.31 of its potential returns per unit of risk. Global X Artificial is currently generating about 0.28 per unit of risk. If you would invest  2,047  in WisdomTree Trust on May 2, 2025 and sell it today you would earn a total of  534.00  from holding WisdomTree Trust or generate 26.09% return on investment over 90 days.

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

WisdomTree Trust   vs.  Global X Artificial

WisdomTree Trust

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Trust are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, WisdomTree Trust demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Global X Artificial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Artificial are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Global X reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Trust and Global X

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

The idea behind WisdomTree Trust and Global X Artificial 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..