Correlation Between Armada Hflr and Invesco EQQQ

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

By analyzing existing cross correlation between Armada Hflr Pr and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Armada Hflr and Invesco EQQQ 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 Armada Hflr with a short position of Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Invesco EQQQ.

Diversification Opportunities for Armada Hflr and Invesco EQQQ

-0.53

Correlation Coefficient

Armada Hflr  Invesco EQQQ

Excellent diversification

The 3 months correlation between Armada and Invesco is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of Armada Hflr i.e., Armada Hflr and Invesco EQQQ go up and down completely randomly.

Pair Corralation between Armada Hflr and Invesco EQQQ

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Invesco EQQQ. In addition to that, Armada Hflr is 1.84 times more volatile than Invesco EQQQ NASDAQ 100. It trades about -0.38 of its total potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about -0.22 per unit of volatility. If you would invest  51,280  in Invesco EQQQ NASDAQ 100 on October 15, 2024 and sell it today you would lose (1,630) from holding Invesco EQQQ NASDAQ 100 or give up 3.18% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Invesco EQQQ NASDAQ 100

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Invesco EQQQ NASDAQ

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EQQQ NASDAQ 100 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Invesco EQQQ may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Armada Hflr and Invesco EQQQ

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

The idea behind Armada Hflr Pr and Invesco EQQQ NASDAQ 100 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.