Correlation Between WisdomTree LargeCap and Fundamental Income
Can any of the company-specific risk be diversified away by investing in both WisdomTree LargeCap and Fundamental Income 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 LargeCap and Fundamental Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree LargeCap Dividend and Fundamental Income Net, you can compare the effects of market volatilities on WisdomTree LargeCap and Fundamental Income 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 LargeCap with a short position of Fundamental Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree LargeCap and Fundamental Income.
Diversification Opportunities for WisdomTree LargeCap and Fundamental Income
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Fundamental is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree LargeCap Dividend and Fundamental Income Net in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Income Net and WisdomTree LargeCap 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 LargeCap Dividend are associated (or correlated) with Fundamental Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Income Net has no effect on the direction of WisdomTree LargeCap i.e., WisdomTree LargeCap and Fundamental Income go up and down completely randomly.
Pair Corralation between WisdomTree LargeCap and Fundamental Income
Considering the 90-day investment horizon WisdomTree LargeCap is expected to generate 1.02 times less return on investment than Fundamental Income. But when comparing it to its historical volatility, WisdomTree LargeCap Dividend is 1.39 times less risky than Fundamental Income. It trades about 0.21 of its potential returns per unit of risk. Fundamental Income Net is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,339 in Fundamental Income Net on November 6, 2025 and sell it today you would earn a total of 166.00 from holding Fundamental Income Net or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree LargeCap Dividend vs. Fundamental Income Net
Performance |
| Timeline |
| WisdomTree LargeCap |
| Fundamental Income Net |
WisdomTree LargeCap and Fundamental Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree LargeCap and Fundamental Income
The main advantage of trading using opposite WisdomTree LargeCap and Fundamental Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree LargeCap position performs unexpectedly, Fundamental Income 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 Fundamental Income will offset losses from the drop in Fundamental Income's long position.| WisdomTree LargeCap vs. WisdomTree MidCap Dividend | WisdomTree LargeCap vs. iShares MSCI EAFE | WisdomTree LargeCap vs. iShares ESG Aware | WisdomTree LargeCap vs. iShares MSCI Taiwan |
| Fundamental Income vs. Investment Managers Series | Fundamental Income vs. Amplify Travel Tech | Fundamental Income vs. Cohen Steers Natural | Fundamental Income vs. Strategy Shares |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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