Correlation Between FT Cboe and WisdomTree International
Can any of the company-specific risk be diversified away by investing in both FT Cboe and WisdomTree International 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 FT Cboe and WisdomTree International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Cboe Vest and WisdomTree International SmallCap, you can compare the effects of market volatilities on FT Cboe and WisdomTree International 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 FT Cboe with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and WisdomTree International.
Diversification Opportunities for FT Cboe and WisdomTree International
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BUFD and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and WisdomTree International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and FT Cboe 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 FT Cboe Vest are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of FT Cboe i.e., FT Cboe and WisdomTree International go up and down completely randomly.
Pair Corralation between FT Cboe and WisdomTree International
Given the investment horizon of 90 days FT Cboe is expected to generate 1.77 times less return on investment than WisdomTree International. But when comparing it to its historical volatility, FT Cboe Vest is 1.55 times less risky than WisdomTree International. It trades about 0.32 of its potential returns per unit of risk. WisdomTree International SmallCap is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 6,708 in WisdomTree International SmallCap on April 25, 2025 and sell it today you would earn a total of 1,078 from holding WisdomTree International SmallCap or generate 16.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 98.39% |
Values | Daily Returns |
FT Cboe Vest vs. WisdomTree International Small
Performance |
Timeline |
FT Cboe Vest |
WisdomTree International |
FT Cboe and WisdomTree International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FT Cboe and WisdomTree International
The main advantage of trading using opposite FT Cboe and WisdomTree International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Cboe position performs unexpectedly, WisdomTree International 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 International will offset losses from the drop in WisdomTree International's long position.FT Cboe vs. First Trust Cboe | FT Cboe vs. FT Cboe Vest | FT Cboe vs. FT Cboe Vest | FT Cboe vs. First Trust Exchange Traded |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |