Correlation Between WisdomTree SmallCap and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and WisdomTree SmallCap 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 SmallCap 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 SmallCap Dividend, you can compare the effects of market volatilities on WisdomTree SmallCap and WisdomTree SmallCap 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 SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and WisdomTree SmallCap.
Diversification Opportunities for WisdomTree SmallCap and WisdomTree SmallCap
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Earnings and WisdomTree SmallCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and WisdomTree SmallCap
Considering the 90-day investment horizon WisdomTree SmallCap is expected to generate 1.3 times less return on investment than WisdomTree SmallCap. In addition to that, WisdomTree SmallCap is 1.01 times more volatile than WisdomTree SmallCap Dividend. It trades about 0.19 of its total potential returns per unit of risk. WisdomTree SmallCap Dividend is currently generating about 0.25 per unit of volatility. If you would invest 3,248 in WisdomTree SmallCap Dividend on November 24, 2025 and sell it today you would earn a total of 521.00 from holding WisdomTree SmallCap Dividend or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Earnings vs. WisdomTree SmallCap Dividend
Performance |
| Timeline |
| WisdomTree SmallCap |
| WisdomTree SmallCap |
WisdomTree SmallCap and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and WisdomTree SmallCap
The main advantage of trading using opposite WisdomTree SmallCap and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, WisdomTree SmallCap 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 SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.The idea behind WisdomTree SmallCap Earnings and WisdomTree SmallCap Dividend 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.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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