Correlation Between WisdomTree MidCap and WisdomTree LargeCap

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

Diversification Opportunities for WisdomTree MidCap and WisdomTree LargeCap

0.0

Correlation Coefficient

WisdomTree MidCap  WisdomTree LargeCap

Pay attention - limited upside

The 3 months correlation between WisdomTree and WisdomTree is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Dividend and WisdomTree LargeCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree LargeCap 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 LargeCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree LargeCap has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and WisdomTree LargeCap go up and down completely randomly.

Pair Corralation between WisdomTree MidCap and WisdomTree LargeCap

If you would invest  4,956  in WisdomTree MidCap Dividend on May 12, 2025 and sell it today you would earn a total of  115.00  from holding WisdomTree MidCap Dividend or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

WisdomTree MidCap Dividend  vs.  WisdomTree LargeCap Dividend

WisdomTree MidCap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree MidCap Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, WisdomTree MidCap is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

WisdomTree LargeCap

Risk-Adjusted Performance

Good

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

Pair Trading with WisdomTree MidCap and WisdomTree LargeCap

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

The idea behind WisdomTree MidCap Dividend and WisdomTree LargeCap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.