Correlation Between WisdomTree MidCap and WisdomTree High

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

Diversification Opportunities for WisdomTree MidCap and WisdomTree High

0.97

Correlation Coefficient

WisdomTree MidCap  WisdomTree High

Almost no diversification

The 3 months correlation between WisdomTree and WisdomTree is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Dividend and WisdomTree High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree High Dividend 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 WisdomTree High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree High Dividend has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and WisdomTree High go up and down completely randomly.

Pair Corralation between WisdomTree MidCap and WisdomTree High

Considering the 90-day investment horizon WisdomTree MidCap is expected to generate 1.14 times less return on investment than WisdomTree High. In addition to that, WisdomTree MidCap is 1.46 times more volatile than WisdomTree High Dividend. It trades about 0.13 of its total potential returns per unit of risk. WisdomTree High Dividend is currently generating about 0.21 per unit of volatility. If you would invest  9,400  in WisdomTree High Dividend on May 27, 2025 and sell it today you would earn a total of  782.00  from holding WisdomTree High Dividend or generate 8.32% return on investment over 90 days.

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

WisdomTree MidCap Dividend  vs.  WisdomTree High Dividend

WisdomTree MidCap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree MidCap Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, WisdomTree MidCap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

WisdomTree High Dividend

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree High Dividend are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical indicators, WisdomTree High may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with WisdomTree MidCap and WisdomTree High

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

The idea behind WisdomTree MidCap Dividend and WisdomTree High 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.