Correlation Between WisdomTree China and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree China 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 China 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 China ex State Owned and First Trust NASDAQ, you can compare the effects of market volatilities on WisdomTree China 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 China with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree China and First Trust.
Diversification Opportunities for WisdomTree China and First Trust
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WisdomTree and First is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree China ex State Owne and First Trust NASDAQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust NASDAQ and WisdomTree China 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 China ex State Owned 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 NASDAQ has no effect on the direction of WisdomTree China i.e., WisdomTree China and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree China and First Trust
Given the investment horizon of 90 days WisdomTree China ex State Owned is expected to generate 0.56 times more return on investment than First Trust. However, WisdomTree China ex State Owned is 1.78 times less risky than First Trust. It trades about 0.11 of its potential returns per unit of risk. First Trust NASDAQ is currently generating about 0.04 per unit of risk. If you would invest 4,102 in WisdomTree China ex State Owned on October 7, 2025 and sell it today you would earn a total of 88.00 from holding WisdomTree China ex State Owned or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree China ex State Owne vs. First Trust NASDAQ
Performance |
| Timeline |
| WisdomTree China |
| First Trust NASDAQ |
WisdomTree China and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree China and First Trust
The main advantage of trading using opposite WisdomTree China and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree China 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 China vs. WisdomTree International Equity | WisdomTree China vs. iShares Morningstar Small Cap | WisdomTree China vs. WisdomTree SmallCap Earnings | WisdomTree China vs. Longview Advantage ETF |
| First Trust vs. Swan Hedged Equity | First Trust vs. SPDR SP China | First Trust vs. Goldman Sachs JUST | First Trust vs. Harbor ETF Trust |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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