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 Emerging, 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

0.0

Correlation Coefficient

WisdomTree Trust  First Trust

Pay attention - limited upside

The 3 months correlation between WisdomTree and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Trust and First Trust Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Emerging 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 Emerging 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

If you would invest  2,678  in First Trust Emerging on April 22, 2025 and sell it today you would earn a total of  202.00  from holding First Trust Emerging or generate 7.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WisdomTree Trust   vs.  First Trust Emerging

WisdomTree Trust

Risk-Adjusted Performance

Solid

Over the last 90 days WisdomTree Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, WisdomTree Trust is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

First Trust Emerging

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Emerging are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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.

The idea behind WisdomTree Trust and First Trust Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.