Correlation Between WisdomTree SmallCap and SPDR SP
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and SPDR SP 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 SmallCap and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Dividend and SPDR SP Homebuilders, you can compare the effects of market volatilities on WisdomTree SmallCap and SPDR SP 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 SmallCap with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and SPDR SP.
Diversification Opportunities for WisdomTree SmallCap and SPDR SP
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Dividend and SPDR SP Homebuilders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Homebuilders and WisdomTree SmallCap 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 SmallCap Dividend are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Homebuilders has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and SPDR SP go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and SPDR SP
Considering the 90-day investment horizon WisdomTree SmallCap Dividend is expected to generate 0.66 times more return on investment than SPDR SP. However, WisdomTree SmallCap Dividend is 1.5 times less risky than SPDR SP. It trades about 0.0 of its potential returns per unit of risk. SPDR SP Homebuilders is currently generating about -0.05 per unit of risk. If you would invest 3,388 in WisdomTree SmallCap Dividend on August 28, 2025 and sell it today you would lose (20.00) from holding WisdomTree SmallCap Dividend or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
WisdomTree SmallCap Dividend vs. SPDR SP Homebuilders
Performance |
| Timeline |
| WisdomTree SmallCap |
| SPDR SP Homebuilders |
WisdomTree SmallCap and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and SPDR SP
The main advantage of trading using opposite WisdomTree SmallCap and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| WisdomTree SmallCap vs. FT Vest Equity | WisdomTree SmallCap vs. Northern Lights | WisdomTree SmallCap vs. Diamond Hill Funds | WisdomTree SmallCap vs. Dimensional International High |
| SPDR SP vs. Columbia Emerging Markets | SPDR SP vs. Direxion Daily Homebuilders | SPDR SP vs. Direxion Daily Cnsmr | SPDR SP vs. Fidelity MSCI Consumer |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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