Correlation Between WisdomTree Europe and First Trust
Can any of the company-specific risk be diversified away by investing in both WisdomTree Europe 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 Europe 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 Europe Hedged and First Trust IndustrialsProducer, you can compare the effects of market volatilities on WisdomTree Europe 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 Europe with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Europe and First Trust.
Diversification Opportunities for WisdomTree Europe 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 Europe Hedged and First Trust IndustrialsProduce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Industri and WisdomTree Europe 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 Europe Hedged 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 Industri has no effect on the direction of WisdomTree Europe i.e., WisdomTree Europe and First Trust go up and down completely randomly.
Pair Corralation between WisdomTree Europe and First Trust
Given the investment horizon of 90 days WisdomTree Europe is expected to generate 2.82 times less return on investment than First Trust. But when comparing it to its historical volatility, WisdomTree Europe Hedged is 1.47 times less risky than First Trust. It trades about 0.14 of its potential returns per unit of risk. First Trust IndustrialsProducer is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,533 in First Trust IndustrialsProducer on November 14, 2025 and sell it today you would earn a total of 1,576 from holding First Trust IndustrialsProducer or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Europe Hedged vs. First Trust IndustrialsProduce
Performance |
| Timeline |
| WisdomTree Europe Hedged |
| First Trust Industri |
WisdomTree Europe and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Europe and First Trust
The main advantage of trading using opposite WisdomTree Europe and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Europe 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 Europe vs. WisdomTree SmallCap Dividend | WisdomTree Europe vs. iShares Global Energy | WisdomTree Europe vs. iShares MSCI Pacific | WisdomTree Europe vs. iShares Financial Services |
| First Trust vs. First Trust Utilities | First Trust vs. First Trust Technology | First Trust vs. First Trust Financials | First Trust vs. Fidelity MSCI Communication |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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