Correlation Between WisdomTree LargeCap and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree LargeCap 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 LargeCap 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 LargeCap Dividend and First Trust Morningstar, you can compare the effects of market volatilities on WisdomTree LargeCap 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 LargeCap with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree LargeCap and First Trust.
Diversification Opportunities for WisdomTree LargeCap and First Trust
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and First is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree LargeCap Dividend and First Trust Morningstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Morningstar and WisdomTree LargeCap 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 LargeCap Dividend 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 Morningstar has no effect on the direction of WisdomTree LargeCap i.e., WisdomTree LargeCap and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree LargeCap and First Trust
Considering the 90-day investment horizon WisdomTree LargeCap is expected to generate 2.27 times less return on investment than First Trust. But when comparing it to its historical volatility, WisdomTree LargeCap Dividend is 1.4 times less risky than First Trust. It trades about 0.19 of its potential returns per unit of risk. First Trust Morningstar is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,176 in First Trust Morningstar on November 4, 2025 and sell it today you would earn a total of 609.00 from holding First Trust Morningstar or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree LargeCap Dividend vs. First Trust Morningstar
Performance |
| Timeline |
| WisdomTree LargeCap |
| First Trust Morningstar |
WisdomTree LargeCap and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree LargeCap and First Trust
The main advantage of trading using opposite WisdomTree LargeCap and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree LargeCap 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 LargeCap vs. WisdomTree MidCap Dividend | WisdomTree LargeCap vs. iShares MSCI EAFE | WisdomTree LargeCap vs. iShares ESG Aware | WisdomTree LargeCap vs. iShares MSCI Taiwan |
| First Trust vs. Invesco KBW Bank | First Trust vs. iShares ESG Aware | First Trust vs. iShares MSCI Taiwan | First Trust vs. Dimensional ETF Trust |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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