Correlation Between WisdomTree SmallCap and WisdomTree Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and WisdomTree 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 SmallCap and WisdomTree Trust 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 Trust , you can compare the effects of market volatilities on WisdomTree SmallCap and WisdomTree 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 SmallCap with a short position of WisdomTree Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and WisdomTree Trust.
Diversification Opportunities for WisdomTree SmallCap and WisdomTree Trust
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Dividend and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Trust 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 Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and WisdomTree Trust go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and WisdomTree Trust
Considering the 90-day investment horizon WisdomTree SmallCap is expected to generate 3.61 times less return on investment than WisdomTree Trust. In addition to that, WisdomTree SmallCap is 1.09 times more volatile than WisdomTree Trust . It trades about 0.01 of its total potential returns per unit of risk. WisdomTree Trust is currently generating about 0.05 per unit of volatility. If you would invest 8,185 in WisdomTree Trust on September 29, 2025 and sell it today you would earn a total of 1,239 from holding WisdomTree Trust or generate 15.14% 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 Trust
Performance |
| Timeline |
| WisdomTree SmallCap |
| WisdomTree Trust |
WisdomTree SmallCap and WisdomTree Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and WisdomTree Trust
The main advantage of trading using opposite WisdomTree SmallCap and WisdomTree Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, WisdomTree 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 WisdomTree Trust will offset losses from the drop in WisdomTree Trust'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 Trust vs. Fidelity Small Mid Factor | WisdomTree Trust vs. ProShares SP MidCap | WisdomTree Trust vs. iShares Russell 2500 | WisdomTree Trust vs. Invesco SP 500 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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