Correlation Between Invesco Exchange and WisdomTree SmallCap

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

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

Diversification Opportunities for Invesco Exchange and WisdomTree SmallCap

0.88

Correlation Coefficient

Invesco Exchange  WisdomTree SmallCap

Very poor diversification

The 3 months correlation between Invesco and WisdomTree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Exchange Traded and WisdomTree SmallCap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap and Invesco Exchange 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 Exchange Traded are associated (or correlated) with WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of Invesco Exchange i.e., Invesco Exchange and WisdomTree SmallCap go up and down completely randomly.

Pair Corralation between Invesco Exchange and WisdomTree SmallCap

Given the investment horizon of 90 days Invesco Exchange Traded is expected to generate 1.03 times more return on investment than WisdomTree SmallCap. However, Invesco Exchange is 1.03 times more volatile than WisdomTree SmallCap Quality. It trades about 0.25 of its potential returns per unit of risk. WisdomTree SmallCap Quality is currently generating about 0.23 per unit of risk. If you would invest  3,068  in Invesco Exchange Traded on October 9, 2025 and sell it today you would earn a total of  133.00  from holding Invesco Exchange Traded or generate 4.34% return on investment over 90 days.

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

Invesco Exchange Traded  vs.  WisdomTree SmallCap Quality

Invesco Exchange Traded

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Exchange Traded are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal primary indicators, Invesco Exchange may actually be approaching a critical reversion point that can send shares even higher in February 2026.

WisdomTree SmallCap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SmallCap Quality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WisdomTree SmallCap is not utilizing all of its potentials. The new stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Invesco Exchange and WisdomTree SmallCap

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

The idea behind Invesco Exchange Traded and WisdomTree SmallCap Quality 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.