Correlation Between First Trust and WisdomTree Global

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

By analyzing existing cross correlation between First Trust Nasdaq and WisdomTree Global High, you can compare the effects of market volatilities on First Trust and WisdomTree Global 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 First Trust with a short position of WisdomTree Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree Global.

Diversification Opportunities for First Trust and WisdomTree Global

0.3

Correlation Coefficient

First Trust  WisdomTree Global

Weak diversification

The 3 months correlation between First and WisdomTree is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Nasdaq and WisdomTree Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Global High and First Trust 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 First Trust Nasdaq are associated (or correlated) with WisdomTree Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Global High has no effect on the direction of First Trust i.e., First Trust and WisdomTree Global go up and down completely randomly.

Pair Corralation between First Trust and WisdomTree Global

Given the investment horizon of 90 days First Trust Nasdaq is expected to generate 2.33 times more return on investment than WisdomTree Global. However, First Trust is 2.33 times more volatile than WisdomTree Global High. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Global High is currently generating about 0.1 per unit of risk. If you would invest  2,689  in First Trust Nasdaq on August 11, 2025 and sell it today you would earn a total of  96.00  from holding First Trust Nasdaq or generate 3.57% return on investment over 90 days.

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

First Trust Nasdaq  vs.  WisdomTree Global High

First Trust Nasdaq

Risk-Adjusted Performance

Soft

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

WisdomTree Global High

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Global High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, WisdomTree Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Trust and WisdomTree Global

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

The idea behind First Trust Nasdaq and WisdomTree Global High 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.