Correlation Between WisdomTree International and Dimensional Small
Can any of the company-specific risk be diversified away by investing in both WisdomTree International and Dimensional Small 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 International and Dimensional Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree International High and Dimensional Small Cap, you can compare the effects of market volatilities on WisdomTree International and Dimensional Small 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 International with a short position of Dimensional Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Dimensional Small.
Diversification Opportunities for WisdomTree International and Dimensional Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Dimensional is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International High and Dimensional Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Small Cap and WisdomTree International 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 International High are associated (or correlated) with Dimensional Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Small Cap has no effect on the direction of WisdomTree International i.e., WisdomTree International and Dimensional Small go up and down completely randomly.
Pair Corralation between WisdomTree International and Dimensional Small
Considering the 90-day investment horizon WisdomTree International High is expected to generate 0.66 times more return on investment than Dimensional Small. However, WisdomTree International High is 1.51 times less risky than Dimensional Small. It trades about 0.11 of its potential returns per unit of risk. Dimensional Small Cap is currently generating about 0.04 per unit of risk. If you would invest 3,724 in WisdomTree International High on October 21, 2025 and sell it today you would earn a total of 1,528 from holding WisdomTree International High or generate 41.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree International High vs. Dimensional Small Cap
Performance |
| Timeline |
| WisdomTree International |
| Dimensional Small Cap |
WisdomTree International and Dimensional Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree International and Dimensional Small
The main advantage of trading using opposite WisdomTree International and Dimensional Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, Dimensional Small 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 Dimensional Small will offset losses from the drop in Dimensional Small's long position.The idea behind WisdomTree International High and Dimensional Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Dimensional Small vs. Dimensional Targeted Value | Dimensional Small vs. Dimensional Marketwide Value | Dimensional Small vs. Dimensional International Core | Dimensional Small vs. Vanguard Pacific Stock |
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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