Correlation Between First Trust and WisdomTree Managed
Can any of the company-specific risk be diversified away by investing in both First Trust and WisdomTree Managed 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 First Trust and WisdomTree Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and WisdomTree Managed Futures, you can compare the effects of market volatilities on First Trust and WisdomTree Managed 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 First Trust with a short position of WisdomTree Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Managed.
Diversification Opportunities for First Trust and WisdomTree Managed
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and WisdomTree is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid and WisdomTree Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Managed and First Trust 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 First Trust Mid are associated (or correlated) with WisdomTree Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Managed has no effect on the direction of First Trust i.e., First Trust and WisdomTree Managed go up and down completely randomly.
Pair Corralation between First Trust and WisdomTree Managed
Given the investment horizon of 90 days First Trust Mid is expected to generate 0.95 times more return on investment than WisdomTree Managed. However, First Trust Mid is 1.05 times less risky than WisdomTree Managed. It trades about 0.13 of its potential returns per unit of risk. WisdomTree Managed Futures is currently generating about 0.11 per unit of risk. If you would invest 3,561 in First Trust Mid on November 30, 2025 and sell it today you would earn a total of 198.00 from holding First Trust Mid or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Mid vs. WisdomTree Managed Futures
Performance |
| Timeline |
| First Trust Mid |
| WisdomTree Managed |
First Trust and WisdomTree Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and WisdomTree Managed
The main advantage of trading using opposite First Trust and WisdomTree Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, WisdomTree Managed 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 Managed will offset losses from the drop in WisdomTree Managed's long position.| First Trust vs. Vanguard SP Small Cap | First Trust vs. Vanguard Russell 3000 | First Trust vs. Vanguard Materials Index | First Trust vs. BNY Mellon Large |
| WisdomTree Managed vs. Elevation Series Trust | WisdomTree Managed vs. Exchange Traded Concepts | WisdomTree Managed vs. Innovator MSCI EAFE | WisdomTree Managed vs. VanEck Inflation Allocation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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