Correlation Between WisdomTree Emerging and Invesco CEF
Can any of the company-specific risk be diversified away by investing in both WisdomTree Emerging and Invesco CEF 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 WisdomTree Emerging and Invesco CEF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Emerging Markets and Invesco CEF Income, you can compare the effects of market volatilities on WisdomTree Emerging and Invesco CEF 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 WisdomTree Emerging with a short position of Invesco CEF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Emerging and Invesco CEF.
Diversification Opportunities for WisdomTree Emerging and Invesco CEF
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WisdomTree and Invesco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Emerging Markets and Invesco CEF Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco CEF Income and WisdomTree Emerging 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 WisdomTree Emerging Markets are associated (or correlated) with Invesco CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco CEF Income has no effect on the direction of WisdomTree Emerging i.e., WisdomTree Emerging and Invesco CEF go up and down completely randomly.
Pair Corralation between WisdomTree Emerging and Invesco CEF
Given the investment horizon of 90 days WisdomTree Emerging is expected to generate 2.41 times less return on investment than Invesco CEF. But when comparing it to its historical volatility, WisdomTree Emerging Markets is 2.17 times less risky than Invesco CEF. It trades about 0.07 of its potential returns per unit of risk. Invesco CEF Income is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,960 in Invesco CEF Income on October 27, 2025 and sell it today you would earn a total of 45.00 from holding Invesco CEF Income or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Emerging Markets vs. Invesco CEF Income
Performance |
| Timeline |
| WisdomTree Emerging |
| Invesco CEF Income |
WisdomTree Emerging and Invesco CEF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Emerging and Invesco CEF
The main advantage of trading using opposite WisdomTree Emerging and Invesco CEF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Emerging position performs unexpectedly, Invesco CEF 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 CEF will offset losses from the drop in Invesco CEF's long position.| WisdomTree Emerging vs. Return Stacked Bonds | WisdomTree Emerging vs. Columbia Short Duration | WisdomTree Emerging vs. iShares Inflation Hedged | WisdomTree Emerging vs. NuShares ETF Trust |
| Invesco CEF vs. SPDR SSGA Sector | Invesco CEF vs. VanEck Rare EarthStrategic | Invesco CEF vs. Capital Group Equity | Invesco CEF vs. ProShares Ultra Financials |
Check out your portfolio center.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.
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