Correlation Between WisdomTree and FIRST TRUST
Can any of the company-specific risk be diversified away by investing in both WisdomTree and FIRST TRUST 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 FIRST TRUST 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 FIRST TRUST GLOBAL, you can compare the effects of market volatilities on WisdomTree and FIRST TRUST 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 FIRST TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and FIRST TRUST.
Diversification Opportunities for WisdomTree and FIRST TRUST
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WisdomTree and FIRST is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 and FIRST TRUST GLOBAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST TRUST GLOBAL 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 FIRST TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST TRUST GLOBAL has no effect on the direction of WisdomTree i.e., WisdomTree and FIRST TRUST go up and down completely randomly.
Pair Corralation between WisdomTree and FIRST TRUST
Assuming the 90 days trading horizon WisdomTree SP 500 is expected to under-perform the FIRST TRUST. In addition to that, WisdomTree is 4.09 times more volatile than FIRST TRUST GLOBAL. It trades about -0.1 of its total potential returns per unit of risk. FIRST TRUST GLOBAL is currently generating about 0.09 per unit of volatility. If you would invest 278,675 in FIRST TRUST GLOBAL on September 20, 2024 and sell it today you would earn a total of 35,925 from holding FIRST TRUST GLOBAL or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SP 500 vs. FIRST TRUST GLOBAL
Performance |
| Timeline |
| WisdomTree SP 500 |
| FIRST TRUST GLOBAL |
WisdomTree and FIRST TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and FIRST TRUST
The main advantage of trading using opposite WisdomTree and FIRST TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree position performs unexpectedly, FIRST TRUST 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 FIRST TRUST will offset losses from the drop in FIRST TRUST's long position.| WisdomTree vs. WisdomTree Natural Gas | WisdomTree vs. Leverage Shares 3x | WisdomTree vs. WisdomTree Natural Gas | WisdomTree vs. WisdomTree Silver 3x |
| FIRST TRUST vs. GraniteShares 3x Short | FIRST TRUST vs. WisdomTree Natural Gas | FIRST TRUST vs. Leverage Shares 3x | FIRST TRUST vs. WisdomTree Natural Gas |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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