Correlation Between IShares SP and WisdomTree International

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

By analyzing existing cross correlation between iShares SP Small Cap and WisdomTree International MidCap, you can compare the effects of market volatilities on IShares SP and WisdomTree International 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 IShares SP with a short position of WisdomTree International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and WisdomTree International.

Diversification Opportunities for IShares SP and WisdomTree International

0.91

Correlation Coefficient

IShares SP  WisdomTree International

Almost no diversification

The 3 months correlation between IShares and WisdomTree is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Small Cap and WisdomTree International MidCa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and IShares SP 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 iShares SP Small Cap are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of IShares SP i.e., IShares SP and WisdomTree International go up and down completely randomly.

Pair Corralation between IShares SP and WisdomTree International

Considering the 90-day investment horizon iShares SP Small Cap is expected to generate 2.01 times more return on investment than WisdomTree International. However, IShares SP is 2.01 times more volatile than WisdomTree International MidCap. It trades about 0.16 of its potential returns per unit of risk. WisdomTree International MidCap is currently generating about 0.23 per unit of risk. If you would invest  9,141  in iShares SP Small Cap on April 30, 2025 and sell it today you would earn a total of  1,182  from holding iShares SP Small Cap or generate 12.93% return on investment over 90 days.

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

iShares SP Small Cap  vs.  WisdomTree International MidCa

iShares SP Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP Small Cap are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, IShares SP unveiled solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree International MidCap are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, WisdomTree International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares SP and WisdomTree International

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

The idea behind iShares SP Small Cap and WisdomTree International MidCap 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.