Correlation Between Vanguard FTSE and WisdomTree Dynamic

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

By analyzing existing cross correlation between Vanguard FTSE Europe and WisdomTree Dynamic Currency, you can compare the effects of market volatilities on Vanguard FTSE and WisdomTree Dynamic 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 Vanguard FTSE with a short position of WisdomTree Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and WisdomTree Dynamic.

Diversification Opportunities for Vanguard FTSE and WisdomTree Dynamic

0.74

Correlation Coefficient

Vanguard FTSE  WisdomTree Dynamic

Poor diversification

The 3 months correlation between Vanguard and WisdomTree is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Europe and WisdomTree Dynamic Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Dynamic and Vanguard FTSE 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 Vanguard FTSE Europe are associated (or correlated) with WisdomTree Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Dynamic has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and WisdomTree Dynamic go up and down completely randomly.

Pair Corralation between Vanguard FTSE and WisdomTree Dynamic

Considering the 90-day investment horizon Vanguard FTSE Europe is expected to generate 1.19 times more return on investment than WisdomTree Dynamic. However, Vanguard FTSE is 1.19 times more volatile than WisdomTree Dynamic Currency. It trades about 0.09 of its potential returns per unit of risk. WisdomTree Dynamic Currency is currently generating about 0.08 per unit of risk. If you would invest  7,892  in Vanguard FTSE Europe on September 7, 2025 and sell it today you would earn a total of  310.00  from holding Vanguard FTSE Europe or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Vanguard FTSE Europe  vs.  WisdomTree Dynamic Currency

Vanguard FTSE Europe

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Europe are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Vanguard FTSE is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

WisdomTree Dynamic

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Dynamic Currency are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, WisdomTree Dynamic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard FTSE and WisdomTree Dynamic

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

The idea behind Vanguard FTSE Europe and WisdomTree Dynamic Currency 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.