Correlation Between First Trust and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree Europe 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 Europe 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 Europe Hedged, you can compare the effects of market volatilities on First Trust and WisdomTree Europe 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 Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Europe.
Diversification Opportunities for First Trust and WisdomTree Europe
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Managed and WisdomTree Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Hedged 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 Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Hedged has no effect on the direction of First Trust i.e., First Trust and WisdomTree Europe go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree Europe
Considering the 90-day investment horizon First Trust is expected to generate 2.54 times less return on investment than WisdomTree Europe. But when comparing it to its historical volatility, First Trust Managed is 1.33 times less risky than WisdomTree Europe. It trades about 0.11 of its potential returns per unit of risk. WisdomTree Europe Hedged is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,955 in WisdomTree Europe Hedged on November 3, 2025 and sell it today you would earn a total of 453.00 from holding WisdomTree Europe Hedged or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.77% |
| Values | Daily Returns |
First Trust Managed vs. WisdomTree Europe Hedged
Performance |
| Timeline |
| First Trust Managed |
| WisdomTree Europe Hedged |
First Trust and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree Europe
The main advantage of trading using opposite First Trust and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.| First Trust vs. WisdomTree Managed Futures | First Trust vs. KFA Mount Lucas | First Trust vs. First Trust California | First Trust vs. Exchange Traded Concepts |
| WisdomTree Europe vs. WisdomTree Japan Hedged | WisdomTree Europe vs. iShares MSCI Global | WisdomTree Europe vs. iShares Digital Infrastructure | WisdomTree Europe vs. Knowledge Leaders Developed |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Prophet Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |