Correlation Between Invesco WilderHill and IShares Russell

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

By analyzing existing cross correlation between Invesco WilderHill Clean and iShares Russell 2000, you can compare the effects of market volatilities on Invesco WilderHill and IShares Russell 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 WilderHill with a short position of IShares Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco WilderHill and IShares Russell.

Diversification Opportunities for Invesco WilderHill and IShares Russell

0.8

Correlation Coefficient

Invesco WilderHill  IShares Russell

Very poor diversification

The 3 months correlation between Invesco and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco WilderHill Clean and iShares Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell 2000 and Invesco WilderHill 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 WilderHill Clean are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell 2000 has no effect on the direction of Invesco WilderHill i.e., Invesco WilderHill and IShares Russell go up and down completely randomly.

Pair Corralation between Invesco WilderHill and IShares Russell

Considering the 90-day investment horizon Invesco WilderHill Clean is expected to under-perform the IShares Russell. In addition to that, Invesco WilderHill is 1.74 times more volatile than iShares Russell 2000. It trades about -0.15 of its total potential returns per unit of risk. iShares Russell 2000 is currently generating about -0.12 per unit of volatility. If you would invest  28,791  in iShares Russell 2000 on December 28, 2024 and sell it today you would lose (3,031) from holding iShares Russell 2000 or give up 10.53% of portfolio value over 90 days.

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

Invesco WilderHill Clean  vs.  iShares Russell 2000

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.

iShares Russell 2000

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell 2000 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Invesco WilderHill and IShares Russell

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

The idea behind Invesco WilderHill Clean and iShares Russell 2000 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.

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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.