Correlation Between WisdomTree Multifactor and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both WisdomTree Multifactor and Invesco QQQ 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 Multifactor and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Multifactor and Invesco QQQ Income, you can compare the effects of market volatilities on WisdomTree Multifactor and Invesco QQQ 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 Multifactor with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Multifactor and Invesco QQQ.
Diversification Opportunities for WisdomTree Multifactor and Invesco QQQ
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Multifactor and Invesco QQQ Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Income and WisdomTree Multifactor 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 Multifactor are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Income has no effect on the direction of WisdomTree Multifactor i.e., WisdomTree Multifactor and Invesco QQQ go up and down completely randomly.
Pair Corralation between WisdomTree Multifactor and Invesco QQQ
Given the investment horizon of 90 days WisdomTree Multifactor is expected to generate 3.21 times less return on investment than Invesco QQQ. But when comparing it to its historical volatility, WisdomTree Multifactor is 1.3 times less risky than Invesco QQQ. It trades about 0.01 of its potential returns per unit of risk. Invesco QQQ Income is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,268 in Invesco QQQ Income on October 25, 2025 and sell it today you would earn a total of 49.00 from holding Invesco QQQ Income or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Multifactor vs. Invesco QQQ Income
Performance |
| Timeline |
| WisdomTree Multifactor |
| Invesco QQQ Income |
WisdomTree Multifactor and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Multifactor and Invesco QQQ
The main advantage of trading using opposite WisdomTree Multifactor and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Multifactor position performs unexpectedly, Invesco QQQ 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 QQQ will offset losses from the drop in Invesco QQQ's long position.| WisdomTree Multifactor vs. iShares MSCI Emerging | WisdomTree Multifactor vs. iShares MSCI France | WisdomTree Multifactor vs. iShares Currency Hedged | WisdomTree Multifactor vs. Nuveen ESG Mid Cap |
| Invesco QQQ vs. Invesco Actively Managed | Invesco QQQ vs. WisdomTree Trust | Invesco QQQ vs. Alpskotak India Growth | Invesco QQQ vs. ALPS International Sector |
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 CEOs Directory module to screen CEOs from public companies around the world.
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