Correlation Between SPDR Dow and WisdomTree Multifactor
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and WisdomTree Multifactor 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 SPDR Dow and WisdomTree Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and WisdomTree Multifactor, you can compare the effects of market volatilities on SPDR Dow and WisdomTree Multifactor 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 SPDR Dow with a short position of WisdomTree Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and WisdomTree Multifactor.
Diversification Opportunities for SPDR Dow and WisdomTree Multifactor
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and WisdomTree is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and WisdomTree Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Multifactor and SPDR Dow 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 SPDR Dow Jones are associated (or correlated) with WisdomTree Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Multifactor has no effect on the direction of SPDR Dow i.e., SPDR Dow and WisdomTree Multifactor go up and down completely randomly.
Pair Corralation between SPDR Dow and WisdomTree Multifactor
Considering the 90-day investment horizon SPDR Dow Jones is expected to generate 1.13 times more return on investment than WisdomTree Multifactor. However, SPDR Dow is 1.13 times more volatile than WisdomTree Multifactor. It trades about 0.08 of its potential returns per unit of risk. WisdomTree Multifactor is currently generating about -0.02 per unit of risk. If you would invest 47,538 in SPDR Dow Jones on November 27, 2025 and sell it today you would earn a total of 1,641 from holding SPDR Dow Jones or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. WisdomTree Multifactor
Performance |
| Timeline |
| SPDR Dow Jones |
| WisdomTree Multifactor |
SPDR Dow and WisdomTree Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and WisdomTree Multifactor
The main advantage of trading using opposite SPDR Dow and WisdomTree Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, WisdomTree Multifactor 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 Multifactor will offset losses from the drop in WisdomTree Multifactor's long position.| SPDR Dow vs. Dimensional Core Equity | SPDR Dow vs. Vanguard Small Cap Growth | SPDR Dow vs. Vanguard Small Cap Growth | SPDR Dow vs. Schwab Broad Market |
| WisdomTree Multifactor vs. iShares MSCI Emerging | WisdomTree Multifactor vs. iShares MSCI France | WisdomTree Multifactor vs. iShares Currency Hedged | WisdomTree Multifactor vs. Nuveen ESG Mid Cap |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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