Correlation Between WisdomTree Japan and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Japan 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 Japan 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 Japan SmallCap and First Trust Nasdaq, you can compare the effects of market volatilities on WisdomTree Japan 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 Japan with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Japan and First Trust.
Diversification Opportunities for WisdomTree Japan and First Trust
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and First is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan SmallCap 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 Japan 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 Japan SmallCap 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 Japan i.e., WisdomTree Japan and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Japan and First Trust
Considering the 90-day investment horizon WisdomTree Japan is expected to generate 1.16 times less return on investment than First Trust. But when comparing it to its historical volatility, WisdomTree Japan SmallCap is 1.21 times less risky than First Trust. It trades about 0.23 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,011 in First Trust Nasdaq on November 6, 2025 and sell it today you would earn a total of 409.50 from holding First Trust Nasdaq or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.36% |
| Values | Daily Returns |
WisdomTree Japan SmallCap vs. First Trust Nasdaq
Performance |
| Timeline |
| WisdomTree Japan SmallCap |
| First Trust Nasdaq |
WisdomTree Japan and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Japan and First Trust
The main advantage of trading using opposite WisdomTree Japan and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Japan 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 Japan vs. Managed Portfolio Series | WisdomTree Japan vs. ProShares Ultra Utilities | WisdomTree Japan vs. Series Portfolios Trust | WisdomTree Japan vs. JP Morgan Exchange Traded |
| First Trust vs. Managed Portfolio Series | First Trust vs. DoubleLine ETF Trust | First Trust vs. Pacer Nasdaq International | First Trust vs. The Advisors Inner |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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