Correlation Between WisdomTree International and Invesco KBW
Can any of the company-specific risk be diversified away by investing in both WisdomTree International and Invesco KBW 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 Invesco KBW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree International High and Invesco KBW High, you can compare the effects of market volatilities on WisdomTree International and Invesco KBW 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 Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree International and Invesco KBW.
Diversification Opportunities for WisdomTree International and Invesco KBW
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Invesco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International High and Invesco KBW High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW High 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 High are associated (or correlated) with Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW High has no effect on the direction of WisdomTree International i.e., WisdomTree International and Invesco KBW go up and down completely randomly.
Pair Corralation between WisdomTree International and Invesco KBW
Considering the 90-day investment horizon WisdomTree International is expected to generate 1.05 times less return on investment than Invesco KBW. But when comparing it to its historical volatility, WisdomTree International High is 2.19 times less risky than Invesco KBW. It trades about 0.46 of its potential returns per unit of risk. Invesco KBW High is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,372 in Invesco KBW High on October 13, 2025 and sell it today you would earn a total of 45.00 from holding Invesco KBW High or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree International High vs. Invesco KBW High
Performance |
| Timeline |
| WisdomTree International |
| Invesco KBW High |
WisdomTree International and Invesco KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree International and Invesco KBW
The main advantage of trading using opposite WisdomTree International and Invesco KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree International position performs unexpectedly, Invesco KBW 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 KBW will offset losses from the drop in Invesco KBW's long position.The idea behind WisdomTree International High and Invesco KBW High 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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