Correlation Between IShares SP and Invesco WilderHill

Can any of the company-specific risk be diversified away by investing in both IShares SP and Invesco WilderHill 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 IShares SP and Invesco WilderHill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares SP Small Cap and Invesco WilderHill Clean, you can compare the effects of market volatilities on IShares SP and Invesco WilderHill 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 IShares SP with a short position of Invesco WilderHill. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Invesco WilderHill.

Diversification Opportunities for IShares SP and Invesco WilderHill

0.75

Correlation Coefficient

IShares SP  Invesco WilderHill

Poor diversification

The 3 months correlation between IShares and Invesco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Small Cap and Invesco WilderHill Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco WilderHill Clean and IShares SP 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 iShares SP Small Cap are associated (or correlated) with Invesco WilderHill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco WilderHill Clean has no effect on the direction of IShares SP i.e., IShares SP and Invesco WilderHill go up and down completely randomly.

Pair Corralation between IShares SP and Invesco WilderHill

Considering the 90-day investment horizon iShares SP Small Cap is expected to generate 0.47 times more return on investment than Invesco WilderHill. However, iShares SP Small Cap is 2.13 times less risky than Invesco WilderHill. It trades about -0.12 of its potential returns per unit of risk. Invesco WilderHill Clean is currently generating about -0.09 per unit of risk. If you would invest  13,663  in iShares SP Small Cap on December 20, 2024 and sell it today you would lose (1,123) from holding iShares SP Small Cap or give up 8.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares SP Small Cap  vs.  Invesco WilderHill Clean

iShares SP Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's forward-looking indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Invesco WilderHill Clean

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco WilderHill Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's fundamental drivers remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with IShares SP and Invesco WilderHill

The main advantage of trading using opposite IShares SP and Invesco WilderHill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Invesco WilderHill 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 WilderHill will offset losses from the drop in Invesco WilderHill's long position.

The idea behind iShares SP Small Cap and Invesco WilderHill Clean 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.