Correlation Between WisdomTree Emerging and First Trust

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

Diversification Opportunities for WisdomTree Emerging and First Trust

0.31

Correlation Coefficient

WisdomTree Emerging  First Trust

Weak diversification

The 3 months correlation between WisdomTree and First is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and First Trust Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi and WisdomTree Emerging 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 Emerging Markets 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 Multi has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and First Trust go up and down completely randomly.

Pair Corralation between WisdomTree Emerging and First Trust

Given the investment horizon of 90 days WisdomTree Emerging Markets is expected to generate 0.85 times more return on investment than First Trust. However, WisdomTree Emerging Markets is 1.17 times less risky than First Trust. It trades about 0.17 of its potential returns per unit of risk. First Trust Multi is currently generating about 0.05 per unit of risk. If you would invest  2,937  in WisdomTree Emerging Markets on August 12, 2025 and sell it today you would earn a total of  244.48  from holding WisdomTree Emerging Markets or generate 8.32% return on investment over 90 days.

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

WisdomTree Emerging Markets  vs.  First Trust Multi

WisdomTree Emerging

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Emerging Markets are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, WisdomTree Emerging may actually be approaching a critical reversion point that can send shares even higher in December 2025.

First Trust Multi

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree Emerging and First Trust

The main advantage of trading using opposite WisdomTree Emerging and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging 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 Emerging Markets and First Trust Multi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.