Correlation Between First Trust and WisdomTree High

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

By analyzing existing cross correlation between First Trust SkyBridge and WisdomTree High Yield, you can compare the effects of market volatilities on First Trust and WisdomTree High 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 First Trust with a short position of WisdomTree High. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and WisdomTree High.

Diversification Opportunities for First Trust and WisdomTree High

-0.81

Correlation Coefficient

First Trust  WisdomTree High

Pay attention - limited upside

The 3 months correlation between First and WisdomTree is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding First Trust SkyBridge and WisdomTree High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree High Yield and First Trust 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 First Trust SkyBridge are associated (or correlated) with WisdomTree High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree High Yield has no effect on the direction of First Trust i.e., First Trust and WisdomTree High go up and down completely randomly.

Pair Corralation between First Trust and WisdomTree High

Given the investment horizon of 90 days First Trust SkyBridge is expected to under-perform the WisdomTree High. In addition to that, First Trust is 27.08 times more volatile than WisdomTree High Yield. It trades about -0.09 of its total potential returns per unit of risk. WisdomTree High Yield is currently generating about 0.19 per unit of volatility. If you would invest  4,753  in WisdomTree High Yield on December 30, 2024 and sell it today you would earn a total of  89.00  from holding WisdomTree High Yield or generate 1.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

First Trust SkyBridge  vs.  WisdomTree High Yield

First Trust SkyBridge

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Trust SkyBridge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

WisdomTree High Yield

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree High Yield are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, WisdomTree High is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Trust and WisdomTree High

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

The idea behind First Trust SkyBridge and WisdomTree High Yield 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.