Correlation Between WisdomTree Physical and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Physical and First 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 Physical and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Physical Gold and First Trust FactorFX, you can compare the effects of market volatilities on WisdomTree Physical and First 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 Physical with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Physical and First Trust.
Diversification Opportunities for WisdomTree Physical and First Trust
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Physical Gold and First Trust FactorFX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust FactorFX and WisdomTree Physical 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 Physical Gold are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust FactorFX has no effect on the direction of WisdomTree Physical i.e., WisdomTree Physical and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Physical and First Trust
Assuming the 90 days trading horizon WisdomTree Physical Gold is expected to generate 3.57 times more return on investment than First Trust. However, WisdomTree Physical is 3.57 times more volatile than First Trust FactorFX. It trades about 0.17 of its potential returns per unit of risk. First Trust FactorFX is currently generating about 0.1 per unit of risk. If you would invest 33,035 in WisdomTree Physical Gold on November 22, 2025 and sell it today you would earn a total of 6,434 from holding WisdomTree Physical Gold or generate 19.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Physical Gold vs. First Trust FactorFX
Performance |
| Timeline |
| WisdomTree Physical Gold |
| First Trust FactorFX |
WisdomTree Physical and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Physical and First Trust
The main advantage of trading using opposite WisdomTree Physical and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Physical position performs unexpectedly, First 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 First Trust will offset losses from the drop in First Trust's long position.| WisdomTree Physical vs. iShares Core MSCI | WisdomTree Physical vs. iShares Core MSCI | WisdomTree Physical vs. Vanguard FTSE All World | WisdomTree Physical vs. Vanguard FTSE Developed |
| First Trust vs. First Trust Global | First Trust vs. First Trust Low | First Trust vs. First Trust Dow | First Trust vs. First Trust Nasdaq |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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