Correlation Between First Trust and WisdomTree Multifactor
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree Multifactor 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 Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Dorsey and WisdomTree Multifactor, you can compare the effects of market volatilities on First Trust and WisdomTree Multifactor 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 Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Multifactor.
Diversification Opportunities for First Trust and WisdomTree Multifactor
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and WisdomTree is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and WisdomTree Multifactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Multifactor 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 Dorsey are associated (or correlated) with WisdomTree Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Multifactor has no effect on the direction of First Trust i.e., First Trust and WisdomTree Multifactor go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree Multifactor
Allowing for the 90-day total investment horizon First Trust Dorsey is expected to generate 1.51 times more return on investment than WisdomTree Multifactor. However, First Trust is 1.51 times more volatile than WisdomTree Multifactor. It trades about 0.17 of its potential returns per unit of risk. WisdomTree Multifactor is currently generating about 0.07 per unit of risk. If you would invest 6,163 in First Trust Dorsey on October 31, 2025 and sell it today you would earn a total of 616.00 from holding First Trust Dorsey or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Dorsey vs. WisdomTree Multifactor
Performance |
| Timeline |
| First Trust Dorsey |
| WisdomTree Multifactor |
First Trust and WisdomTree Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree Multifactor
The main advantage of trading using opposite First Trust and WisdomTree Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree Multifactor 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 Multifactor will offset losses from the drop in WisdomTree Multifactor's long position.| First Trust vs. Fidelity Covington Trust | First Trust vs. WisdomTree MidCap Dividend | First Trust vs. First Trust NASDAQ | First Trust vs. SPDR EURO STOXX |
| WisdomTree Multifactor vs. iShares MSCI Emerging | WisdomTree Multifactor vs. iShares MSCI France | WisdomTree Multifactor vs. iShares Currency Hedged | WisdomTree Multifactor vs. Nuveen ESG Mid Cap |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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