Correlation Between Invesco FTSE and Virtus WMC
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE and Virtus WMC 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 Invesco FTSE and Virtus WMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco FTSE RAFI and Virtus WMC International, you can compare the effects of market volatilities on Invesco FTSE and Virtus WMC 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 Invesco FTSE with a short position of Virtus WMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and Virtus WMC.
Diversification Opportunities for Invesco FTSE and Virtus WMC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Virtus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and Virtus WMC International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus WMC International and Invesco 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 Invesco FTSE RAFI are associated (or correlated) with Virtus WMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus WMC International has no effect on the direction of Invesco FTSE i.e., Invesco FTSE and Virtus WMC go up and down completely randomly.
Pair Corralation between Invesco FTSE and Virtus WMC
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 1.15 times more return on investment than Virtus WMC. However, Invesco FTSE is 1.15 times more volatile than Virtus WMC International. It trades about 0.05 of its potential returns per unit of risk. Virtus WMC International is currently generating about 0.04 per unit of risk. If you would invest 4,544 in Invesco FTSE RAFI on August 28, 2024 and sell it today you would earn a total of 380.00 from holding Invesco FTSE RAFI or generate 8.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.52% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. Virtus WMC International
Performance |
| Timeline |
| Invesco FTSE RAFI |
| Virtus WMC International |
Invesco FTSE and Virtus WMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and Virtus WMC
The main advantage of trading using opposite Invesco FTSE and Virtus WMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE position performs unexpectedly, Virtus WMC 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 Virtus WMC will offset losses from the drop in Virtus WMC's long position.| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI |
| Virtus WMC vs. Franklin Templeton ETF | Virtus WMC vs. Altrius Global Dividend | Virtus WMC vs. Invesco Exchange Traded | Virtus WMC vs. Franklin International Core |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |