Correlation Between WisdomTree SmallCap and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and WisdomTree Europe 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 Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Quality and WisdomTree Europe SmallCap, you can compare the effects of market volatilities on WisdomTree SmallCap and WisdomTree Europe 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 Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and WisdomTree Europe.
Diversification Opportunities for WisdomTree SmallCap and WisdomTree Europe
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Quality and WisdomTree Europe SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe 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 Quality are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and WisdomTree Europe go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and WisdomTree Europe
Given the investment horizon of 90 days WisdomTree SmallCap is expected to generate 2.73 times less return on investment than WisdomTree Europe. In addition to that, WisdomTree SmallCap is 1.36 times more volatile than WisdomTree Europe SmallCap. It trades about 0.02 of its total potential returns per unit of risk. WisdomTree Europe SmallCap is currently generating about 0.07 per unit of volatility. If you would invest 5,777 in WisdomTree Europe SmallCap on October 21, 2025 and sell it today you would earn a total of 1,574 from holding WisdomTree Europe SmallCap or generate 27.25% 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 Quality vs. WisdomTree Europe SmallCap
Performance |
| Timeline |
| WisdomTree SmallCap |
| WisdomTree Europe |
WisdomTree SmallCap and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and WisdomTree Europe
The main advantage of trading using opposite WisdomTree SmallCap and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.| WisdomTree SmallCap vs. WisdomTree Japan SmallCap | WisdomTree SmallCap vs. iShares MSCI Sweden | WisdomTree SmallCap vs. iShares MSCI Emerging | WisdomTree SmallCap vs. JPMorgan Diversified Return |
| WisdomTree Europe vs. WisdomTree International MidCap | WisdomTree Europe vs. iShares MSCI Turkey | WisdomTree Europe vs. iShares Currency Hedged | WisdomTree Europe vs. iShares MSCI Japan |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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