Correlation Between OShares Small and WisdomTree International

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

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

Diversification Opportunities for OShares Small and WisdomTree International

0.75

Correlation Coefficient

OShares Small  WisdomTree International

Poor diversification

The 3 months correlation between OShares and WisdomTree is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding OShares Small Cap Quality and WisdomTree International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree International and OShares Small 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 OShares Small Cap Quality are associated (or correlated) with WisdomTree International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree International has no effect on the direction of OShares Small i.e., OShares Small and WisdomTree International go up and down completely randomly.

Pair Corralation between OShares Small and WisdomTree International

Given the investment horizon of 90 days OShares Small Cap Quality is expected to under-perform the WisdomTree International. In addition to that, OShares Small is 1.17 times more volatile than WisdomTree International SmallCap. It trades about -0.08 of its total potential returns per unit of risk. WisdomTree International SmallCap is currently generating about -0.04 per unit of volatility. If you would invest  7,867  in WisdomTree International SmallCap on August 26, 2025 and sell it today you would lose (139.00) from holding WisdomTree International SmallCap or give up 1.77% of portfolio value over 90 days.

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

OShares Small Cap Quality  vs.  WisdomTree International Small

OShares Small Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days OShares Small Cap Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, OShares Small is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with OShares Small and WisdomTree International

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

The idea behind OShares Small Cap Quality and WisdomTree International SmallCap 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.

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 CEOs Directory module to screen CEOs from public companies around the world.