Correlation Between Invesco Advantage and WisdomTree

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

By analyzing existing cross correlation between Invesco Advantage MIT and WisdomTree, you can compare the effects of market volatilities on Invesco Advantage and WisdomTree 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 Advantage with a short position of WisdomTree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Advantage and WisdomTree.

Diversification Opportunities for Invesco Advantage and WisdomTree

0.3

Correlation Coefficient

Invesco Advantage  WisdomTree

Weak diversification

The 3 months correlation between Invesco and WisdomTree is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree and Invesco Advantage 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 Advantage MIT are associated (or correlated) with WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Invesco Advantage i.e., Invesco Advantage and WisdomTree go up and down completely randomly.

Pair Corralation between Invesco Advantage and WisdomTree

Considering the 90-day investment horizon Invesco Advantage MIT is expected to generate 0.46 times more return on investment than WisdomTree. However, Invesco Advantage MIT is 2.17 times less risky than WisdomTree. It trades about -0.01 of its potential returns per unit of risk. WisdomTree is currently generating about -0.27 per unit of risk. If you would invest  906.00  in Invesco Advantage MIT on December 1, 2024 and sell it today you would lose (5.00) from holding Invesco Advantage MIT or give up 0.55% of portfolio value over 90 days.

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

Invesco Advantage MIT  vs.  WisdomTree

Invesco Advantage MIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

WisdomTree

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Invesco Advantage and WisdomTree

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

The idea behind Invesco Advantage MIT and WisdomTree 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..