Correlation Between First Trust and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree MidCap 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 MidCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dividend and WisdomTree MidCap Earnings, you can compare the effects of market volatilities on First Trust and WisdomTree MidCap 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 MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree MidCap.
Diversification Opportunities for First Trust and WisdomTree MidCap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and WisdomTree is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dividend and WisdomTree MidCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 Dividend are associated (or correlated) with WisdomTree MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of First Trust i.e., First Trust and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree MidCap
Given the investment horizon of 90 days First Trust Dividend is expected to generate 0.98 times more return on investment than WisdomTree MidCap. However, First Trust Dividend is 1.02 times less risky than WisdomTree MidCap. It trades about 0.27 of its potential returns per unit of risk. WisdomTree MidCap Earnings is currently generating about 0.19 per unit of risk. If you would invest 5,458 in First Trust Dividend on November 22, 2025 and sell it today you would earn a total of 798.00 from holding First Trust Dividend or generate 14.62% 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 Dividend vs. WisdomTree MidCap Earnings
Performance |
| Timeline |
| First Trust Dividend |
| WisdomTree MidCap |
First Trust and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree MidCap
The main advantage of trading using opposite First Trust and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree MidCap 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 MidCap will offset losses from the drop in WisdomTree MidCap's long position.| First Trust vs. Matthews China Active | First Trust vs. Innovator ETFs Trust | First Trust vs. First Trust Asia | First Trust vs. Jpmorgan Active Small |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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