Correlation Between Fidelity Small and WisdomTree Japan

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

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

Diversification Opportunities for Fidelity Small and WisdomTree Japan

0.89

Correlation Coefficient

Fidelity Small  WisdomTree Japan

Very poor diversification

The 3 months correlation between Fidelity and WisdomTree is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Mid Factor and WisdomTree Japan SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan SmallCap and Fidelity Small 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 Fidelity Small Mid Factor are associated (or correlated) with WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan SmallCap has no effect on the direction of Fidelity Small i.e., Fidelity Small and WisdomTree Japan go up and down completely randomly.

Pair Corralation between Fidelity Small and WisdomTree Japan

Given the investment horizon of 90 days Fidelity Small is expected to generate 2.68 times less return on investment than WisdomTree Japan. In addition to that, Fidelity Small is 1.0 times more volatile than WisdomTree Japan SmallCap. It trades about 0.04 of its total potential returns per unit of risk. WisdomTree Japan SmallCap is currently generating about 0.1 per unit of volatility. If you would invest  9,199  in WisdomTree Japan SmallCap on October 1, 2025 and sell it today you would earn a total of  513.00  from holding WisdomTree Japan SmallCap or generate 5.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Fidelity Small Mid Factor  vs.  WisdomTree Japan SmallCap

Fidelity Small Mid

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Mid Factor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Fidelity Small is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

WisdomTree Japan SmallCap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Japan SmallCap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady technical and fundamental indicators, WisdomTree Japan is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Fidelity Small and WisdomTree Japan

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

The idea behind Fidelity Small Mid Factor and WisdomTree Japan SmallCap 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.