Correlation Between WisdomTree Multifactor and WisdomTree Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Multifactor and WisdomTree 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 WisdomTree 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 WisdomTree Trust , you can compare the effects of market volatilities on WisdomTree Multifactor and WisdomTree 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 WisdomTree Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Multifactor and WisdomTree Trust.
Diversification Opportunities for WisdomTree Multifactor and WisdomTree Trust
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Multifactor and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Trust 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 WisdomTree Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of WisdomTree Multifactor i.e., WisdomTree Multifactor and WisdomTree Trust go up and down completely randomly.
Pair Corralation between WisdomTree Multifactor and WisdomTree Trust
Given the investment horizon of 90 days WisdomTree Multifactor is expected to under-perform the WisdomTree Trust. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree Multifactor is 2.46 times less risky than WisdomTree Trust. The etf trades about -0.05 of its potential returns per unit of risk. The WisdomTree Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,917 in WisdomTree Trust on October 23, 2025 and sell it today you would earn a total of 35.00 from holding WisdomTree Trust or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Multifactor vs. WisdomTree Trust
Performance |
| Timeline |
| WisdomTree Multifactor |
| WisdomTree Trust |
WisdomTree Multifactor and WisdomTree Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Multifactor and WisdomTree Trust
The main advantage of trading using opposite WisdomTree Multifactor and WisdomTree Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Multifactor position performs unexpectedly, WisdomTree 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 WisdomTree Trust will offset losses from the drop in WisdomTree 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 |
| WisdomTree Trust vs. Invesco QQQ Income | WisdomTree Trust vs. Alpskotak India Growth | WisdomTree Trust vs. Adaptive Alpha Opportunities | WisdomTree Trust vs. AIM ETF Products |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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