Correlation Between WisdomTree MidCap and Pacer Small

Can any of the company-specific risk be diversified away by investing in both WisdomTree MidCap and Pacer Small 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 MidCap and Pacer Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree MidCap Dividend and Pacer Small Cap, you can compare the effects of market volatilities on WisdomTree MidCap and Pacer Small 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 MidCap with a short position of Pacer Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree MidCap and Pacer Small.

Diversification Opportunities for WisdomTree MidCap and Pacer Small

0.41

Correlation Coefficient

WisdomTree MidCap  Pacer Small

Very weak diversification

The 3 months correlation between WisdomTree and Pacer is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Dividend and Pacer Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Small Cap and WisdomTree MidCap 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 MidCap Dividend are associated (or correlated) with Pacer Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Small Cap has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and Pacer Small go up and down completely randomly.

Pair Corralation between WisdomTree MidCap and Pacer Small

Considering the 90-day investment horizon WisdomTree MidCap is expected to generate 28.93 times less return on investment than Pacer Small. But when comparing it to its historical volatility, WisdomTree MidCap Dividend is 1.21 times less risky than Pacer Small. It trades about 0.0 of its potential returns per unit of risk. Pacer Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,180  in Pacer Small Cap on August 15, 2025 and sell it today you would earn a total of  209.50  from holding Pacer Small Cap or generate 5.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

WisdomTree MidCap Dividend  vs.  Pacer Small Cap

WisdomTree MidCap

Risk-Adjusted Performance

Weakest

Over the last 90 days WisdomTree MidCap Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WisdomTree MidCap is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pacer Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Small Cap are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Pacer Small is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WisdomTree MidCap and Pacer Small

The main advantage of trading using opposite WisdomTree MidCap and Pacer Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree MidCap position performs unexpectedly, Pacer Small 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 Pacer Small will offset losses from the drop in Pacer Small's long position.

The idea behind WisdomTree MidCap Dividend and Pacer Small Cap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.