Correlation Between WisdomTree SmallCap and WisdomTree China
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and WisdomTree China 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 China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Earnings and WisdomTree China ex State Owned, you can compare the effects of market volatilities on WisdomTree SmallCap and WisdomTree China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and WisdomTree China.
Diversification Opportunities for WisdomTree SmallCap and WisdomTree China
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between WisdomTree and WisdomTree is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Earnings and WisdomTree China ex State Owne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree China 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 Earnings are associated (or correlated) with WisdomTree China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree China has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and WisdomTree China go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and WisdomTree China
Considering the 90-day investment horizon WisdomTree SmallCap Earnings is expected to generate 1.26 times more return on investment than WisdomTree China. However, WisdomTree SmallCap is 1.26 times more volatile than WisdomTree China ex State Owned. It trades about 0.32 of its potential returns per unit of risk. WisdomTree China ex State Owned is currently generating about 0.14 per unit of risk. If you would invest 5,470 in WisdomTree SmallCap Earnings on September 25, 2025 and sell it today you would earn a total of 330.00 from holding WisdomTree SmallCap Earnings or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Earnings vs. WisdomTree China ex State Owne
Performance |
| Timeline |
| WisdomTree SmallCap |
| WisdomTree China |
WisdomTree SmallCap and WisdomTree China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and WisdomTree China
The main advantage of trading using opposite WisdomTree SmallCap and WisdomTree China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, WisdomTree China 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 China will offset losses from the drop in WisdomTree China's long position.The idea behind WisdomTree SmallCap Earnings and WisdomTree China ex State Owned 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.
| WisdomTree China vs. WisdomTree International Equity | WisdomTree China vs. iShares Morningstar Small Cap | WisdomTree China vs. WisdomTree SmallCap Earnings | WisdomTree China vs. Longview Advantage ETF |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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