Correlation Between WisdomTree Trust and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both WisdomTree Trust and WisdomTree SmallCap 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 WisdomTree SmallCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Trust and WisdomTree SmallCap Dividend, you can compare the effects of market volatilities on WisdomTree Trust and WisdomTree SmallCap 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 WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Trust and WisdomTree SmallCap.
Diversification Opportunities for WisdomTree Trust and WisdomTree SmallCap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and WisdomTree is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and WisdomTree SmallCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of WisdomTree Trust i.e., WisdomTree Trust and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between WisdomTree Trust and WisdomTree SmallCap
Considering the 90-day investment horizon WisdomTree Trust is expected to generate 0.92 times more return on investment than WisdomTree SmallCap. However, WisdomTree Trust is 1.09 times less risky than WisdomTree SmallCap. It trades about 0.05 of its potential returns per unit of risk. WisdomTree SmallCap Dividend is currently generating about 0.01 per unit of risk. If you would invest 8,185 in WisdomTree Trust on September 29, 2025 and sell it today you would earn a total of 1,239 from holding WisdomTree Trust or generate 15.14% 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. WisdomTree SmallCap Dividend
Performance |
| Timeline |
| WisdomTree Trust |
| WisdomTree SmallCap |
WisdomTree Trust and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Trust and WisdomTree SmallCap
The main advantage of trading using opposite WisdomTree Trust and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Trust position performs unexpectedly, WisdomTree SmallCap 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 SmallCap will offset losses from the drop in WisdomTree SmallCap's long position.| WisdomTree Trust vs. Fidelity Small Mid Factor | WisdomTree Trust vs. ProShares SP MidCap | WisdomTree Trust vs. iShares Russell 2500 | WisdomTree Trust vs. Invesco SP 500 |
| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Europe Hedged | WisdomTree SmallCap vs. iShares Global Energy | WisdomTree SmallCap vs. iShares Financial Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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