Correlation Between WisdomTree Global and First Trust

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

Diversification Opportunities for WisdomTree Global and First Trust

0.82

Correlation Coefficient

WisdomTree Global  First Trust

Very poor diversification

The 3 months correlation between WisdomTree and First is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Global ex US and First Trust International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust International and WisdomTree Global 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 Global ex US 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 International has no effect on the direction of WisdomTree Global i.e., WisdomTree Global and First Trust go up and down completely randomly.

Pair Corralation between WisdomTree Global and First Trust

Considering the 90-day investment horizon WisdomTree Global ex US is expected to generate 1.07 times more return on investment than First Trust. However, WisdomTree Global is 1.07 times more volatile than First Trust International. It trades about 0.18 of its potential returns per unit of risk. First Trust International is currently generating about 0.05 per unit of risk. If you would invest  3,641  in WisdomTree Global ex US on April 29, 2025 and sell it today you would earn a total of  343.00  from holding WisdomTree Global ex US or generate 9.42% return on investment over 90 days.

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

WisdomTree Global ex US  vs.  First Trust International

WisdomTree Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Global ex US are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, WisdomTree Global may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Global and First Trust

The main advantage of trading using opposite WisdomTree Global and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Global 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 Global ex US and First Trust International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.