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 Efficient 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
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree International Effic 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 Efficient 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
Given the investment horizon of 90 days WisdomTree International Efficient is expected to generate 0.93 times more return on investment than Invesco KBW. However, WisdomTree International Efficient is 1.08 times less risky than Invesco KBW. It trades about 0.25 of its potential returns per unit of risk. Invesco KBW High is currently generating about 0.14 per unit of risk. If you would invest 4,337 in WisdomTree International Efficient on September 26, 2025 and sell it today you would earn a total of 139.00 from holding WisdomTree International Efficient or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree International Effic 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.| WisdomTree International vs. 6 Meridian Mega | WisdomTree International vs. iShares MSCI Poland | WisdomTree International vs. Xtrackers MSCI Japan | WisdomTree International vs. American Century Quality |
| Invesco KBW vs. Invesco KBW Property | Invesco KBW vs. Vanguard Multifactor | Invesco KBW vs. iShares MSCI Poland | Invesco KBW vs. Invesco SP Emerging |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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