Correlation Between Innovator ETFs and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both Innovator ETFs 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 Innovator ETFs and WisdomTree Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovator ETFs Trust and WisdomTree Europe SmallCap, you can compare the effects of market volatilities on Innovator ETFs 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 Innovator ETFs with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovator ETFs and WisdomTree Europe.
Diversification Opportunities for Innovator ETFs and WisdomTree Europe
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Innovator and WisdomTree is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Innovator ETFs Trust and WisdomTree Europe SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe and Innovator ETFs 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 Innovator ETFs Trust 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 has no effect on the direction of Innovator ETFs i.e., Innovator ETFs and WisdomTree Europe go up and down completely randomly.
Pair Corralation between Innovator ETFs and WisdomTree Europe
Given the investment horizon of 90 days Innovator ETFs is expected to generate 1.95 times less return on investment than WisdomTree Europe. But when comparing it to its historical volatility, Innovator ETFs Trust is 2.01 times less risky than WisdomTree Europe. It trades about 0.28 of its potential returns per unit of risk. WisdomTree Europe SmallCap is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 6,895 in WisdomTree Europe SmallCap on December 1, 2025 and sell it today you would earn a total of 873.00 from holding WisdomTree Europe SmallCap or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovator ETFs Trust vs. WisdomTree Europe SmallCap
Performance |
| Timeline |
| Innovator ETFs Trust |
| WisdomTree Europe |
Innovator ETFs and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovator ETFs and WisdomTree Europe
The main advantage of trading using opposite Innovator ETFs and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator ETFs 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.| Innovator ETFs vs. Innovator SP 500 | Innovator ETFs vs. Innovator Russell 2000 | Innovator ETFs vs. Innovator Russell 2000 | Innovator ETFs vs. Innovator Equity 5 |
| WisdomTree Europe vs. WisdomTree International MidCap | WisdomTree Europe vs. iShares MSCI Turkey | WisdomTree Europe vs. iShares Currency Hedged | WisdomTree Europe vs. iShares MSCI Japan |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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