Correlation Between WisdomTree International and Innovator

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

By analyzing existing cross correlation between WisdomTree International SmallCap and Innovator SP 500, you can compare the effects of market volatilities on WisdomTree International and Innovator 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 International with a short position of Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Innovator.

Diversification Opportunities for WisdomTree International and Innovator

0.08

Correlation Coefficient

WisdomTree International  Innovator

Significant diversification

The 3 months correlation between WisdomTree and Innovator is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Small and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 and WisdomTree International 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 International SmallCap are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of WisdomTree International i.e., WisdomTree International and Innovator go up and down completely randomly.

Pair Corralation between WisdomTree International and Innovator

Considering the 90-day investment horizon WisdomTree International SmallCap is expected to under-perform the Innovator. In addition to that, WisdomTree International is 1.93 times more volatile than Innovator SP 500. It trades about -0.04 of its total potential returns per unit of risk. Innovator SP 500 is currently generating about 0.06 per unit of volatility. If you would invest  4,212  in Innovator SP 500 on August 26, 2025 and sell it today you would earn a total of  53.00  from holding Innovator SP 500 or generate 1.26% return on investment over 90 days.

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

WisdomTree International Small  vs.  Innovator SP 500

WisdomTree International

Risk-Adjusted Performance

Weakest

Over the last 90 days WisdomTree International SmallCap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, WisdomTree International is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Innovator SP 500

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Innovator is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WisdomTree International and Innovator

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

The idea behind WisdomTree International SmallCap and Innovator SP 500 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.