Correlation Between WisdomTree Earnings and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both WisdomTree Earnings 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 Earnings 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 Earnings 500 and Invesco DWA Momentum, you can compare the effects of market volatilities on WisdomTree Earnings 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 Earnings with a short position of Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Earnings and Invesco DWA.
Diversification Opportunities for WisdomTree Earnings and Invesco DWA
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Earnings 500 and Invesco DWA Momentum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Momentum and WisdomTree Earnings 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 Earnings 500 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 Momentum has no effect on the direction of WisdomTree Earnings i.e., WisdomTree Earnings and Invesco DWA go up and down completely randomly.
Pair Corralation between WisdomTree Earnings and Invesco DWA
Considering the 90-day investment horizon WisdomTree Earnings is expected to generate 3.91 times less return on investment than Invesco DWA. But when comparing it to its historical volatility, WisdomTree Earnings 500 is 2.21 times less risky than Invesco DWA. It trades about 0.07 of its potential returns per unit of risk. Invesco DWA Momentum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11,163 in Invesco DWA Momentum on November 15, 2025 and sell it today you would earn a total of 1,325 from holding Invesco DWA Momentum or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Earnings 500 vs. Invesco DWA Momentum
Performance |
| Timeline |
| WisdomTree Earnings 500 |
| Invesco DWA Momentum |
WisdomTree Earnings and Invesco DWA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Earnings and Invesco DWA
The main advantage of trading using opposite WisdomTree Earnings and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Earnings 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 Earnings vs. WisdomTree High Dividend | WisdomTree Earnings vs. iShares Consumer Staples | WisdomTree Earnings vs. iShares MSCI Switzerland | WisdomTree Earnings vs. Direxion NASDAQ 100 Equal |
| Invesco DWA vs. Direxion NASDAQ 100 Equal | Invesco DWA vs. Pacer Trendpilot 100 | Invesco DWA vs. First Trust Large | Invesco DWA vs. Goldman Sachs MarketBeta |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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