Correlation Between Gotham Enhanced and WisdomTree SmallCap

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

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

Diversification Opportunities for Gotham Enhanced and WisdomTree SmallCap

0.01

Correlation Coefficient

Gotham Enhanced  WisdomTree SmallCap

Significant diversification

The 3 months correlation between Gotham and WisdomTree is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Enhanced 500 and WisdomTree SmallCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and Gotham Enhanced 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 Gotham Enhanced 500 are associated (or correlated) with WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of Gotham Enhanced i.e., Gotham Enhanced and WisdomTree SmallCap go up and down completely randomly.

Pair Corralation between Gotham Enhanced and WisdomTree SmallCap

Given the investment horizon of 90 days Gotham Enhanced 500 is expected to generate 0.79 times more return on investment than WisdomTree SmallCap. However, Gotham Enhanced 500 is 1.27 times less risky than WisdomTree SmallCap. It trades about 0.04 of its potential returns per unit of risk. WisdomTree SmallCap Earnings is currently generating about -0.03 per unit of risk. If you would invest  3,546  in Gotham Enhanced 500 on August 26, 2025 and sell it today you would earn a total of  72.00  from holding Gotham Enhanced 500 or generate 2.03% return on investment over 90 days.

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

Gotham Enhanced 500  vs.  WisdomTree SmallCap Earnings

Gotham Enhanced 500

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Enhanced 500 are ranked lower than 3 (%) 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.

WisdomTree SmallCap

Risk-Adjusted Performance

Weakest

Over the last 90 days WisdomTree SmallCap Earnings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Gotham Enhanced and WisdomTree SmallCap

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

The idea behind Gotham Enhanced 500 and WisdomTree SmallCap Earnings 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..