Correlation Between WisdomTree Emerging and VictoryShares Emerging

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

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

Diversification Opportunities for WisdomTree Emerging and VictoryShares Emerging

0.99

Correlation Coefficient

WisdomTree Emerging  VictoryShares Emerging

No risk reduction

The 3 months correlation between WisdomTree and VictoryShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and VictoryShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Emerging and WisdomTree Emerging 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 Emerging Markets are associated (or correlated) with VictoryShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Emerging has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and VictoryShares Emerging go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and VictoryShares Emerging

Given the investment horizon of 90 days WisdomTree Emerging is expected to generate 2.74 times less return on investment than VictoryShares Emerging. In addition to that, WisdomTree Emerging is 1.04 times more volatile than VictoryShares Emerging Markets. It trades about 0.02 of its total potential returns per unit of risk. VictoryShares Emerging Markets is currently generating about 0.04 per unit of volatility. If you would invest  5,189  in VictoryShares Emerging Markets on May 3, 2025 and sell it today you would earn a total of  29.00  from holding VictoryShares Emerging Markets or generate 0.56% return on investment over 90 days.

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

WisdomTree Emerging Markets  vs.  VictoryShares Emerging Markets

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, WisdomTree Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

VictoryShares Emerging

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VictoryShares Emerging Markets are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VictoryShares Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with WisdomTree Emerging and VictoryShares Emerging

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

The idea behind WisdomTree Emerging Markets and VictoryShares 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.