Correlation Between WisdomTree and SPDR SP
Can any of the company-specific risk be diversified away by investing in both WisdomTree and SPDR SP 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 and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SP 500 and SPDR SP Technology, you can compare the effects of market volatilities on WisdomTree and SPDR SP 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 with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and SPDR SP.
Diversification Opportunities for WisdomTree and SPDR SP
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 and SPDR SP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Technology and WisdomTree 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 SP 500 are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Technology has no effect on the direction of WisdomTree i.e., WisdomTree and SPDR SP go up and down completely randomly.
Pair Corralation between WisdomTree and SPDR SP
Assuming the 90 days trading horizon WisdomTree SP 500 is expected to generate 1.8 times more return on investment than SPDR SP. However, WisdomTree is 1.8 times more volatile than SPDR SP Technology. It trades about 0.27 of its potential returns per unit of risk. SPDR SP Technology is currently generating about 0.29 per unit of risk. If you would invest 617,550 in WisdomTree SP 500 on April 25, 2025 and sell it today you would earn a total of 280,000 from holding WisdomTree SP 500 or generate 45.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
WisdomTree SP 500 vs. SPDR SP Technology
Performance |
Timeline |
WisdomTree SP 500 |
SPDR SP Technology |
WisdomTree and SPDR SP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WisdomTree and SPDR SP
The main advantage of trading using opposite WisdomTree and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.WisdomTree vs. WisdomTree Zinc | WisdomTree vs. WisdomTree Brent Crude | WisdomTree vs. WisdomTree Aluminium 2x | WisdomTree vs. WisdomTree Enhanced Commodity |
SPDR SP vs. SPDR Dow Jones | SPDR SP vs. SPDR SP Dividend | SPDR SP vs. SPDR Barclays Euro | SPDR SP vs. SPDR SP Consumer |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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