Correlation Between First Trust and WisdomTree Mortgage
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree Mortgage 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 Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Small and WisdomTree Mortgage Plus, you can compare the effects of market volatilities on First Trust and WisdomTree Mortgage 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 Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Mortgage.
Diversification Opportunities for First Trust and WisdomTree Mortgage
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 Small and WisdomTree Mortgage Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Mortgage Plus 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 Small are associated (or correlated) with WisdomTree Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Mortgage Plus has no effect on the direction of First Trust i.e., First Trust and WisdomTree Mortgage go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree Mortgage
Considering the 90-day investment horizon First Trust Small is expected to generate 4.58 times more return on investment than WisdomTree Mortgage. However, First Trust is 4.58 times more volatile than WisdomTree Mortgage Plus. It trades about 0.17 of its potential returns per unit of risk. WisdomTree Mortgage Plus is currently generating about 0.14 per unit of risk. If you would invest 5,629 in First Trust Small on December 2, 2025 and sell it today you would earn a total of 684.00 from holding First Trust Small or generate 12.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Small vs. WisdomTree Mortgage Plus
Performance |
| Timeline |
| First Trust Small |
| WisdomTree Mortgage Plus |
First Trust and WisdomTree Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree Mortgage
The main advantage of trading using opposite First Trust and WisdomTree Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree Mortgage 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 Mortgage will offset losses from the drop in WisdomTree Mortgage's long position.| First Trust vs. WHITEWOLF Publicly Listed | First Trust vs. John Hancock Exchange Traded | First Trust vs. Allspring Exchange Traded Funds | First Trust vs. ProShares Equities for |
| WisdomTree Mortgage vs. Advisor Managed Portfolios | WisdomTree Mortgage vs. SPDR SSGA My2028 | WisdomTree Mortgage vs. AB Corporate Bond | WisdomTree Mortgage vs. Simplify Exchange Traded |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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