Correlation Between IShares MSCI and Invesco WilderHill

Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 MSCI 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 MSCI Global and Invesco WilderHill Clean, you can compare the effects of market volatilities on IShares MSCI 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 MSCI with a short position of Invesco WilderHill. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Invesco WilderHill.

Diversification Opportunities for IShares MSCI and Invesco WilderHill

0.65

Correlation Coefficient

IShares MSCI  Invesco WilderHill

Poor diversification

The 3 months correlation between IShares and Invesco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Global 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 MSCI 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 MSCI Global 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 MSCI i.e., IShares MSCI and Invesco WilderHill go up and down completely randomly.

Pair Corralation between IShares MSCI and Invesco WilderHill

Given the investment horizon of 90 days IShares MSCI is expected to generate 3.3 times less return on investment than Invesco WilderHill. In addition to that, IShares MSCI is 1.01 times more volatile than Invesco WilderHill Clean. It trades about 0.08 of its total potential returns per unit of risk. Invesco WilderHill Clean is currently generating about 0.27 per unit of volatility. 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	Significant
Accuracy	100.0%
Values	Daily Returns

iShares MSCI Global  vs.  Invesco WilderHill Clean

iShares MSCI Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, IShares MSCI 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 IShares MSCI and Invesco WilderHill

The main advantage of trading using opposite IShares MSCI and Invesco WilderHill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI Global 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.