Correlation Between WisdomTree SmallCap and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both WisdomTree SmallCap and Invesco DWA 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 SmallCap and Invesco DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree SmallCap Dividend and Invesco DWA SmallCap, you can compare the effects of market volatilities on WisdomTree SmallCap and Invesco DWA 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 SmallCap with a short position of Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree SmallCap and Invesco DWA.
Diversification Opportunities for WisdomTree SmallCap and Invesco DWA
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SmallCap Dividend and Invesco DWA SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA SmallCap and WisdomTree SmallCap 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 SmallCap Dividend are associated (or correlated) with Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA SmallCap has no effect on the direction of WisdomTree SmallCap i.e., WisdomTree SmallCap and Invesco DWA go up and down completely randomly.
Pair Corralation between WisdomTree SmallCap and Invesco DWA
Considering the 90-day investment horizon WisdomTree SmallCap Dividend is expected to generate 0.79 times more return on investment than Invesco DWA. However, WisdomTree SmallCap Dividend is 1.26 times less risky than Invesco DWA. It trades about 0.17 of its potential returns per unit of risk. Invesco DWA SmallCap is currently generating about 0.1 per unit of risk. If you would invest 3,333 in WisdomTree SmallCap Dividend on November 30, 2025 and sell it today you would earn a total of 371.00 from holding WisdomTree SmallCap Dividend or generate 11.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SmallCap Dividend vs. Invesco DWA SmallCap
Performance |
| Timeline |
| WisdomTree SmallCap |
| Invesco DWA SmallCap |
WisdomTree SmallCap and Invesco DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree SmallCap and Invesco DWA
The main advantage of trading using opposite WisdomTree SmallCap and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree SmallCap position performs unexpectedly, Invesco DWA 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 Invesco DWA will offset losses from the drop in Invesco DWA's long position.| WisdomTree SmallCap vs. WisdomTree Emerging Markets | WisdomTree SmallCap vs. WisdomTree Europe Hedged | WisdomTree SmallCap vs. iShares Global Energy | WisdomTree SmallCap vs. iShares Financial Services |
| Invesco DWA vs. Invesco Dividend Achievers | Invesco DWA vs. Invesco NASDAQ Next | Invesco DWA vs. Invesco Russell 1000 | Invesco DWA vs. Invesco RAFI Strategic |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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