Correlation Between IShares EM and WisdomTree Zinc

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

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

Diversification Opportunities for IShares EM and WisdomTree Zinc

0.71

Correlation Coefficient

IShares EM  WisdomTree Zinc

Poor diversification

The 3 months correlation between IShares and WisdomTree is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares EM Dividend and WisdomTree Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Zinc and IShares EM 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 iShares EM Dividend are associated (or correlated) with WisdomTree Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Zinc has no effect on the direction of IShares EM i.e., IShares EM and WisdomTree Zinc go up and down completely randomly.

Pair Corralation between IShares EM and WisdomTree Zinc

Assuming the 90 days trading horizon iShares EM Dividend is expected to generate 0.57 times more return on investment than WisdomTree Zinc. However, iShares EM Dividend is 1.76 times less risky than WisdomTree Zinc. It trades about 0.25 of its potential returns per unit of risk. WisdomTree Zinc is currently generating about 0.1 per unit of risk. If you would invest  1,482  in iShares EM Dividend on April 24, 2025 and sell it today you would earn a total of  163.00  from holding iShares EM Dividend or generate 11.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

iShares EM Dividend  vs.  WisdomTree Zinc

iShares EM Dividend

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares EM Dividend are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares EM may actually be approaching a critical reversion point that can send shares even higher in August 2025.

WisdomTree Zinc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Zinc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Zinc may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares EM and WisdomTree Zinc

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

The idea behind iShares EM Dividend and WisdomTree Zinc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.