Correlation Between ETF Series and WisdomTree International

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

By analyzing existing cross correlation between ETF Series Solutions and WisdomTree International Multifactor, you can compare the effects of market volatilities on ETF Series and WisdomTree International 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 ETF Series with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and WisdomTree International.

Diversification Opportunities for ETF Series and WisdomTree International

0.59

Correlation Coefficient

ETF Series  WisdomTree International

Very weak diversification

The 3 months correlation between ETF and WisdomTree is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and WisdomTree International Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and ETF Series 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 ETF Series Solutions are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of ETF Series i.e., ETF Series and WisdomTree International go up and down completely randomly.

Pair Corralation between ETF Series and WisdomTree International

Given the investment horizon of 90 days ETF Series Solutions is expected to generate 2.35 times more return on investment than WisdomTree International. However, ETF Series is 2.35 times more volatile than WisdomTree International Multifactor. It trades about 0.06 of its potential returns per unit of risk. WisdomTree International Multifactor is currently generating about 0.11 per unit of risk. If you would invest  3,334  in ETF Series Solutions on July 31, 2025 and sell it today you would earn a total of  151.36  from holding ETF Series Solutions or generate 4.54% return on investment over 90 days.

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

ETF Series Solutions  vs.  WisdomTree International Multi

ETF Series Solutions

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, ETF Series is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International Multifactor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, WisdomTree International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ETF Series and WisdomTree International

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

The idea behind ETF Series Solutions and WisdomTree International Multifactor 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.