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 Switzerland and WisdomTree Europe Quality, 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
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and WisdomTree is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Switzerland and WisdomTree Europe Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Quality 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 Switzerland 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 Quality 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 1.26 times less return on investment than WisdomTree Europe. In addition to that, First Trust is 1.01 times more volatile than WisdomTree Europe Quality. It trades about 0.17 of its total potential returns per unit of risk. WisdomTree Europe Quality is currently generating about 0.22 per unit of volatility. If you would invest 3,516 in WisdomTree Europe Quality on November 2, 2025 and sell it today you would earn a total of 383.72 from holding WisdomTree Europe Quality or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Switzerland vs. WisdomTree Europe Quality
Performance |
| Timeline |
| First Trust Switzerland |
| WisdomTree Europe Quality |
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 Europe Quality | First Trust vs. Roundhill Sports Betting | First Trust vs. Franklin FTSE Mexico | First Trust vs. Morgan Stanley ETF |
| WisdomTree Europe vs. First Trust Switzerland | WisdomTree Europe vs. Morgan Stanley ETF | WisdomTree Europe vs. Franklin FTSE Australia | WisdomTree Europe vs. Roundhill Sports Betting |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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