Correlation Between WisdomTree SmallCap and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap 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 SmallCap 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 SmallCap Quality and First Trust Senior, you can compare the effects of market volatilities on WisdomTree SmallCap 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 SmallCap with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and First Trust.
Diversification Opportunities for WisdomTree SmallCap and First Trust
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Quality and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and WisdomTree SmallCap 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 SmallCap 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 Senior has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and First Trust
Given the investment horizon of 90 days WisdomTree SmallCap is expected to generate 1.32 times less return on investment than First Trust. In addition to that, WisdomTree SmallCap is 1.26 times more volatile than First Trust Senior. It trades about 0.08 of its total potential returns per unit of risk. First Trust Senior is currently generating about 0.14 per unit of volatility. If you would invest 931.00 in First Trust Senior on November 5, 2025 and sell it today you would earn a total of 67.00 from holding First Trust Senior or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Quality vs. First Trust Senior
Performance |
| Timeline |
| WisdomTree SmallCap |
| First Trust Senior |
WisdomTree SmallCap and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and First Trust
The main advantage of trading using opposite WisdomTree SmallCap and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap 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 SmallCap vs. Lsv Global Managed | WisdomTree SmallCap vs. Guinness Atkinson Global | WisdomTree SmallCap vs. Fidelity Sustainable Emerging | WisdomTree SmallCap vs. Fidelity Fund Fidelity |
| First Trust vs. Franklin Templeton Limited | First Trust vs. Saba Capital Income | First Trust vs. Lmp Capital And | First Trust vs. MFS Multimarket 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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