Correlation Between WisdomTree MidCap and First Trust

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

Diversification Opportunities for WisdomTree MidCap and First Trust

0.64

Correlation Coefficient

WisdomTree MidCap  First Trust

Poor diversification

The 3 months correlation between WisdomTree and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree MidCap Dividend and First Trust Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Value 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 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 Value has no effect on the direction of WisdomTree MidCap i.e., WisdomTree MidCap and First Trust go up and down completely randomly.

Pair Corralation between WisdomTree MidCap and First Trust

Considering the 90-day investment horizon WisdomTree MidCap Dividend is expected to generate 1.51 times more return on investment than First Trust. However, WisdomTree MidCap is 1.51 times more volatile than First Trust Value. It trades about 0.18 of its potential returns per unit of risk. First Trust Value is currently generating about -0.02 per unit of risk. If you would invest  5,118  in WisdomTree MidCap Dividend on September 12, 2025 and sell it today you would earn a total of  183.00  from holding WisdomTree MidCap Dividend or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

WisdomTree MidCap Dividend  vs.  First Trust Value

WisdomTree MidCap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree MidCap Dividend are ranked lower than 1 (%) 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 recent stock price disarray, may contribute to short-term losses for the investors.

First Trust Value

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trust Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree MidCap and First Trust

The main advantage of trading using opposite WisdomTree MidCap and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree MidCap 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 MidCap Dividend and First Trust Value 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.