Correlation Between WisdomTree International and WisdomTree SmallCap

Can any of the company-specific risk be diversified away by investing in both WisdomTree International 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 International 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 International SmallCap and WisdomTree SmallCap Dividend, you can compare the effects of market volatilities on WisdomTree International 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 International with a short position of WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and WisdomTree SmallCap.

Diversification Opportunities for WisdomTree International and WisdomTree SmallCap

0.9

Correlation Coefficient

WisdomTree International  WisdomTree SmallCap

Almost no diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Small 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 International 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 International SmallCap 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 International i.e., WisdomTree International and WisdomTree SmallCap go up and down completely randomly.

Pair Corralation between WisdomTree International and WisdomTree SmallCap

Considering the 90-day investment horizon WisdomTree International SmallCap is expected to generate 0.6 times more return on investment than WisdomTree SmallCap. However, WisdomTree International SmallCap is 1.66 times less risky than WisdomTree SmallCap. It trades about 0.23 of its potential returns per unit of risk. WisdomTree SmallCap Dividend is currently generating about 0.07 per unit of risk. If you would invest  6,858  in WisdomTree International SmallCap on May 2, 2025 and sell it today you would earn a total of  705.00  from holding WisdomTree International SmallCap or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

WisdomTree International Small  vs.  WisdomTree SmallCap Dividend

WisdomTree International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International SmallCap are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, WisdomTree International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

WisdomTree SmallCap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SmallCap Dividend are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, WisdomTree SmallCap is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree International and WisdomTree SmallCap

The main advantage of trading using opposite WisdomTree International and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International 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.

The idea behind WisdomTree International SmallCap and WisdomTree SmallCap Dividend 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.