Correlation Between WisdomTree Europe and WisdomTree Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Europe and WisdomTree Trust 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 WisdomTree Europe and WisdomTree Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Europe Hedged and WisdomTree Trust , you can compare the effects of market volatilities on WisdomTree Europe and WisdomTree Trust 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 WisdomTree Europe with a short position of WisdomTree Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Europe and WisdomTree Trust.
Diversification Opportunities for WisdomTree Europe and WisdomTree Trust
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WisdomTree and WisdomTree is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Europe Hedged and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Trust and WisdomTree Europe 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 WisdomTree Europe Hedged are associated (or correlated) with WisdomTree Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of WisdomTree Europe i.e., WisdomTree Europe and WisdomTree Trust go up and down completely randomly.
Pair Corralation between WisdomTree Europe and WisdomTree Trust
Given the investment horizon of 90 days WisdomTree Europe Hedged is expected to generate 0.7 times more return on investment than WisdomTree Trust. However, WisdomTree Europe Hedged is 1.43 times less risky than WisdomTree Trust. It trades about 0.16 of its potential returns per unit of risk. WisdomTree Trust is currently generating about -0.05 per unit of risk. If you would invest 5,222 in WisdomTree Europe Hedged on December 1, 2025 and sell it today you would earn a total of 389.00 from holding WisdomTree Europe Hedged or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Europe Hedged vs. WisdomTree Trust
Performance |
| Timeline |
| WisdomTree Europe Hedged |
| WisdomTree Trust |
WisdomTree Europe and WisdomTree Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Europe and WisdomTree Trust
The main advantage of trading using opposite WisdomTree Europe and WisdomTree Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Europe position performs unexpectedly, WisdomTree Trust 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 Trust will offset losses from the drop in WisdomTree Trust's long position.| WisdomTree Europe vs. WisdomTree SmallCap Dividend | WisdomTree Europe vs. iShares Global Energy | WisdomTree Europe vs. iShares MSCI Pacific | WisdomTree Europe vs. iShares Financial Services |
| WisdomTree Trust vs. Nuveen ESG Large Cap | WisdomTree Trust vs. TCW ETF Trust | WisdomTree Trust vs. FlexShares Morningstar Market | WisdomTree Trust vs. SPDR SP Semiconductor |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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