Correlation Between First Trust and Invesco WilderHill

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

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

Diversification Opportunities for First Trust and Invesco WilderHill

0.86

Correlation Coefficient

First Trust  Invesco WilderHill

Very poor diversification

The 3 months correlation between First and Invesco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Water 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 First Trust 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 First Trust Water 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 First Trust i.e., First Trust and Invesco WilderHill go up and down completely randomly.

Pair Corralation between First Trust and Invesco WilderHill

Considering the 90-day investment horizon First Trust is expected to generate 4.35 times less return on investment than Invesco WilderHill. But when comparing it to its historical volatility, First Trust Water is 2.33 times less risky than Invesco WilderHill. It trades about 0.14 of its potential returns per unit of risk. Invesco WilderHill Clean is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,605  in Invesco WilderHill Clean on May 6, 2025 and sell it today you would earn a total of  685.00  from holding Invesco WilderHill Clean or generate 42.68% return on investment over 90 days.

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

First Trust Water  vs.  Invesco WilderHill Clean

First Trust Water

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Water are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Invesco WilderHill Clean

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco WilderHill Clean are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Invesco WilderHill showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Trust and Invesco WilderHill

The main advantage of trading using opposite First Trust and Invesco WilderHill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Water 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.