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 Mid and WisdomTree SmallCap Quality, 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
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and WisdomTree is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and WisdomTree SmallCap Quality 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 Mid 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 Mid is expected to generate 0.89 times more return on investment than WisdomTree SmallCap. However, First Trust Mid is 1.13 times less risky than WisdomTree SmallCap. It trades about 0.15 of its potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.06 per unit of risk. If you would invest 5,508 in First Trust Mid on November 29, 2025 and sell it today you would earn a total of 472.00 from holding First Trust Mid or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Mid vs. WisdomTree SmallCap Quality
Performance |
| Timeline |
| First Trust Mid |
| 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. John Hancock Exchange Traded | First Trust vs. Allspring Exchange Traded Funds | First Trust vs. ProShares Equities for | First Trust vs. iShares MSCI Emerging |
| WisdomTree SmallCap vs. Lsv Global Managed | WisdomTree SmallCap vs. Guinness Atkinson Global | WisdomTree SmallCap vs. Fidelity Sustainable Emerging | WisdomTree SmallCap vs. Fidelity Fund Fidelity |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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