Correlation Between WisdomTree SmallCap and Gotham Enhanced

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

By analyzing existing cross correlation between WisdomTree SmallCap Earnings and Gotham Enhanced 500, you can compare the effects of market volatilities on WisdomTree SmallCap and Gotham Enhanced 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 SmallCap with a short position of Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and Gotham Enhanced.

Diversification Opportunities for WisdomTree SmallCap and Gotham Enhanced

0.39

Correlation Coefficient

WisdomTree SmallCap  Gotham Enhanced

Weak diversification

The 3 months correlation between WisdomTree and Gotham is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Earnings and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 and WisdomTree SmallCap 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 SmallCap Earnings are associated (or correlated) with Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and Gotham Enhanced go up and down completely randomly.

Pair Corralation between WisdomTree SmallCap and Gotham Enhanced

Considering the 90-day investment horizon WisdomTree SmallCap is expected to generate 1.09 times less return on investment than Gotham Enhanced. In addition to that, WisdomTree SmallCap is 1.26 times more volatile than Gotham Enhanced 500. It trades about 0.06 of its total potential returns per unit of risk. Gotham Enhanced 500 is currently generating about 0.09 per unit of volatility. If you would invest  3,530  in Gotham Enhanced 500 on September 15, 2025 and sell it today you would earn a total of  172.00  from holding Gotham Enhanced 500 or generate 4.87% return on investment over 90 days.

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

WisdomTree SmallCap Earnings  vs.  Gotham Enhanced 500

WisdomTree SmallCap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SmallCap Earnings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, WisdomTree SmallCap is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gotham Enhanced 500

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Enhanced 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gotham Enhanced is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree SmallCap and Gotham Enhanced

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

The idea behind WisdomTree SmallCap Earnings and Gotham Enhanced 500 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..