Correlation Between WisdomTree Trust and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Trust 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 Trust 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 Trust and First Trust Nasdaq, you can compare the effects of market volatilities on WisdomTree Trust 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 Trust with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Trust and First Trust.
Diversification Opportunities for WisdomTree Trust and First Trust
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq and WisdomTree 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 WisdomTree Trust 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 Nasdaq has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Trust and First Trust
Given the investment horizon of 90 days WisdomTree Trust is expected to generate 1.21 times more return on investment than First Trust. However, WisdomTree Trust is 1.21 times more volatile than First Trust Nasdaq. It trades about 0.05 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.04 per unit of risk. If you would invest 1,516 in WisdomTree Trust on August 24, 2024 and sell it today you would earn a total of 682.00 from holding WisdomTree Trust or generate 44.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Trust vs. First Trust Nasdaq
Performance |
| Timeline |
| WisdomTree Trust |
| First Trust Nasdaq |
WisdomTree Trust and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Trust and First Trust
The main advantage of trading using opposite WisdomTree Trust and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Trust 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 Trust vs. First Trust Nasdaq | WisdomTree Trust vs. Robo Global Artificial | WisdomTree Trust vs. Tidal Trust II | WisdomTree Trust vs. Global X Artificial |
| First Trust vs. Robo Global Robotics | First Trust vs. Robo Global Artificial | First Trust vs. Global X Robotics | First Trust vs. Direxion Daily Robotics |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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