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 Hedged and First Trust Ultra, 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
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and First is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Japan Hedged and First Trust Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Ultra 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 Hedged 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 Ultra 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 Hedged is expected to generate 19.45 times more return on investment than First Trust. However, WisdomTree Japan is 19.45 times more volatile than First Trust Ultra. It trades about 0.3 of its potential returns per unit of risk. First Trust Ultra is currently generating about 0.29 per unit of risk. If you would invest 13,869 in WisdomTree Japan Hedged on December 3, 2025 and sell it today you would earn a total of 2,818 from holding WisdomTree Japan Hedged or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Japan Hedged vs. First Trust Ultra
Performance |
| Timeline |
| WisdomTree Japan Hedged |
| First Trust Ultra |
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. Pacer Small Cap | WisdomTree Japan vs. WisdomTree MidCap Dividend | WisdomTree Japan vs. iShares Financials ETF | WisdomTree Japan vs. SPDR SP 600 |
| First Trust vs. iShares Floating Rate | First Trust vs. Schwab 5 10 Year | First Trust vs. iShares ESG Aware | First Trust vs. iShares MSCI EAFE |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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