Correlation Between WisdomTree SmallCap and WisdomTree Total
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and WisdomTree Total 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 SmallCap and WisdomTree Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Dividend and WisdomTree Total Dividend, you can compare the effects of market volatilities on WisdomTree SmallCap and WisdomTree Total 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 SmallCap with a short position of WisdomTree Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and WisdomTree Total.
Diversification Opportunities for WisdomTree SmallCap and WisdomTree Total
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Dividend and WisdomTree Total Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Total Dividend and WisdomTree SmallCap 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 SmallCap Dividend are associated (or correlated) with WisdomTree Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Total Dividend has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and WisdomTree Total go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and WisdomTree Total
Considering the 90-day investment horizon WisdomTree SmallCap Dividend is expected to generate 1.82 times more return on investment than WisdomTree Total. However, WisdomTree SmallCap is 1.82 times more volatile than WisdomTree Total Dividend. It trades about 0.17 of its potential returns per unit of risk. WisdomTree Total Dividend is currently generating about 0.19 per unit of risk. If you would invest 3,333 in WisdomTree SmallCap Dividend on December 1, 2025 and sell it today you would earn a total of 371.00 from holding WisdomTree SmallCap Dividend or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Dividend vs. WisdomTree Total Dividend
Performance |
| Timeline |
| WisdomTree SmallCap |
| WisdomTree Total Dividend |
WisdomTree SmallCap and WisdomTree Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and WisdomTree Total
The main advantage of trading using opposite WisdomTree SmallCap and WisdomTree Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, WisdomTree Total 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 Total will offset losses from the drop in WisdomTree Total's long position.| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Europe Hedged | WisdomTree SmallCap vs. iShares Global Energy | WisdomTree SmallCap vs. iShares Financial Services |
| WisdomTree Total vs. Matthews Emerging Markets | WisdomTree Total vs. ProShares Ultra SmallCap600 | WisdomTree Total vs. WBI BullBear Yield | WisdomTree Total vs. iShares MSCI China |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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