Correlation Between WisdomTree NASDAQ and SPDR Morningstar

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

By analyzing existing cross correlation between WisdomTree NASDAQ 100 and SPDR Morningstar Multi Asset, you can compare the effects of market volatilities on WisdomTree NASDAQ and SPDR Morningstar 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 NASDAQ with a short position of SPDR Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree NASDAQ and SPDR Morningstar.

Diversification Opportunities for WisdomTree NASDAQ and SPDR Morningstar

0.76

Correlation Coefficient

WisdomTree NASDAQ  SPDR Morningstar

Poor diversification

The 3 months correlation between WisdomTree and SPDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree NASDAQ 100 and SPDR Morningstar Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Morningstar Multi and WisdomTree NASDAQ 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 NASDAQ 100 are associated (or correlated) with SPDR Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Morningstar Multi has no effect on the direction of WisdomTree NASDAQ i.e., WisdomTree NASDAQ and SPDR Morningstar go up and down completely randomly.

Pair Corralation between WisdomTree NASDAQ and SPDR Morningstar

Assuming the 90 days trading horizon WisdomTree NASDAQ 100 is expected to generate 6.18 times more return on investment than SPDR Morningstar. However, WisdomTree NASDAQ is 6.18 times more volatile than SPDR Morningstar Multi Asset. It trades about 0.32 of its potential returns per unit of risk. SPDR Morningstar Multi Asset is currently generating about 0.09 per unit of risk. If you would invest  14,700  in WisdomTree NASDAQ 100 on April 23, 2025 and sell it today you would earn a total of  11,213  from holding WisdomTree NASDAQ 100 or generate 76.28% return on investment over 90 days.

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

WisdomTree NASDAQ 100  vs.  SPDR Morningstar Multi Asset

WisdomTree NASDAQ 100

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree NASDAQ 100 are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree NASDAQ unveiled solid returns over the last few months and may actually be approaching a breakup point.

SPDR Morningstar Multi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Morningstar Multi Asset are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SPDR Morningstar is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree NASDAQ and SPDR Morningstar

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

The idea behind WisdomTree NASDAQ 100 and SPDR Morningstar Multi Asset 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.