Correlation Between WisdomTree MidCap and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree MidCap 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 MidCap 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 MidCap Quality and First Trust Enhanced, you can compare the effects of market volatilities on WisdomTree MidCap 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 MidCap with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree MidCap and First Trust.
Diversification Opportunities for WisdomTree MidCap and First Trust
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and First is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Quality and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and WisdomTree MidCap 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 MidCap Quality 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 Enhanced has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree MidCap and First Trust
Given the investment horizon of 90 days WisdomTree MidCap Quality is expected to generate 1.27 times more return on investment than First Trust. However, WisdomTree MidCap is 1.27 times more volatile than First Trust Enhanced. It trades about 0.07 of its potential returns per unit of risk. First Trust Enhanced is currently generating about 0.08 per unit of risk. If you would invest 2,751 in WisdomTree MidCap Quality on November 4, 2025 and sell it today you would earn a total of 109.00 from holding WisdomTree MidCap Quality or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree MidCap Quality vs. First Trust Enhanced
Performance |
| Timeline |
| WisdomTree MidCap Quality |
| First Trust Enhanced |
WisdomTree MidCap and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree MidCap and First Trust
The main advantage of trading using opposite WisdomTree MidCap and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree MidCap 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 MidCap vs. Litman Gregory Funds | WisdomTree MidCap vs. WisdomTree Inflation Plus | WisdomTree MidCap vs. Tidal Trust II | WisdomTree MidCap vs. Hotchkis Wiley SMID |
| First Trust vs. Flaherty and Crumrine | First Trust vs. Neuberger Berman Mlp | First Trust vs. Sprott Physical Platinum | First Trust vs. BlackRock Municipal Income |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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