Correlation Between First Trust and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Managed and WisdomTree SmallCap Dividend, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree SmallCap.
Diversification Opportunities for First Trust and WisdomTree SmallCap
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and WisdomTree is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and WisdomTree SmallCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and First Trust 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 First Trust Managed 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 First Trust i.e., First Trust and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree SmallCap
Considering the 90-day investment horizon First Trust is expected to generate 1.07 times less return on investment than WisdomTree SmallCap. But when comparing it to its historical volatility, First Trust Managed is 9.98 times less risky than WisdomTree SmallCap. It trades about 0.27 of its potential returns per unit of risk. WisdomTree SmallCap Dividend is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,332 in WisdomTree SmallCap Dividend on October 3, 2025 and sell it today you would earn a total of 13.00 from holding WisdomTree SmallCap Dividend or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Managed vs. WisdomTree SmallCap Dividend
Performance |
| Timeline |
| First Trust Managed |
| WisdomTree SmallCap |
First Trust and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree SmallCap
The main advantage of trading using opposite First Trust and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust NASDAQ 100 | First Trust vs. WisdomTree SmallCap Dividend | First Trust vs. iShares Consumer Discretionary | First Trust vs. iShares Cohen Steers |
| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Europe Hedged | WisdomTree SmallCap vs. iShares Global Energy | WisdomTree SmallCap vs. iShares Financial Services |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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