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 RiverFront, 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between WisdomTree and First is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and First Trust RiverFront in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust RiverFront 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 RiverFront 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 1.03 times more return on investment than First Trust. However, WisdomTree Emerging is 1.03 times more volatile than First Trust RiverFront. It trades about 0.32 of its potential returns per unit of risk. First Trust RiverFront is currently generating about 0.3 per unit of risk. If you would invest 2,967 in WisdomTree Emerging Markets on April 21, 2025 and sell it today you would earn a total of 535.00 from holding WisdomTree Emerging Markets or generate 18.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
WisdomTree Emerging Markets vs. First Trust RiverFront
Performance |
Timeline |
WisdomTree Emerging |
First Trust RiverFront |
WisdomTree Emerging and First Trust Volatility Contrast
Predicted Return Density |
Returns |
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.WisdomTree Emerging vs. WisdomTree China ex State Owned | WisdomTree Emerging vs. iShares ESG Aware | WisdomTree Emerging vs. SPDR Portfolio Emerging | WisdomTree Emerging vs. WisdomTree International Hedged |
First Trust vs. First Trust Emerging | First Trust vs. First Trust RiverFront | First Trust vs. First Trust RiverFront | First Trust vs. First Trust Emerging |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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