Correlation Between WisdomTree Multifactor and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Multifactor 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 Multifactor 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 Multifactor and First Trust Multi Asset, you can compare the effects of market volatilities on WisdomTree Multifactor 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 Multifactor with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Multifactor and First Trust.
Diversification Opportunities for WisdomTree Multifactor and First Trust
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between WisdomTree and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Multifactor and First Trust Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and WisdomTree Multifactor 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 Multifactor 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 Multi has no effect on the direction of WisdomTree Multifactor i.e., WisdomTree Multifactor and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Multifactor and First Trust
Given the investment horizon of 90 days WisdomTree Multifactor is expected to generate 1.48 times more return on investment than First Trust. However, WisdomTree Multifactor is 1.48 times more volatile than First Trust Multi Asset. It trades about 0.06 of its potential returns per unit of risk. First Trust Multi Asset is currently generating about 0.05 per unit of risk. If you would invest 4,107 in WisdomTree Multifactor on September 30, 2025 and sell it today you would earn a total of 1,085 from holding WisdomTree Multifactor or generate 26.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Multifactor vs. First Trust Multi Asset
Performance |
| Timeline |
| WisdomTree Multifactor |
| First Trust Multi |
WisdomTree Multifactor and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Multifactor and First Trust
The main advantage of trading using opposite WisdomTree Multifactor and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Multifactor 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 Multifactor vs. iShares MSCI Emerging | WisdomTree Multifactor vs. iShares MSCI France | WisdomTree Multifactor vs. iShares Currency Hedged | WisdomTree Multifactor vs. Nuveen ESG Mid Cap |
| First Trust vs. First Trust Exchange Traded | First Trust vs. iShares MSCI Poland | First Trust vs. WisdomTree Dynamic Currency | First Trust vs. InfraCap MLP ETF |
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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