Correlation Between Invesco CoinShares and Invesco EQQQ

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

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

Diversification Opportunities for Invesco CoinShares and Invesco EQQQ

0.8

Correlation Coefficient

Invesco CoinShares  Invesco EQQQ

Very poor diversification

The 3 months correlation between Invesco and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco CoinShares Global 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 Invesco CoinShares 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 CoinShares Global 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 Invesco CoinShares i.e., Invesco CoinShares and Invesco EQQQ go up and down completely randomly.

Pair Corralation between Invesco CoinShares and Invesco EQQQ

Assuming the 90 days trading horizon Invesco CoinShares Global is expected to generate 3.0 times more return on investment than Invesco EQQQ. However, Invesco CoinShares is 3.0 times more volatile than Invesco EQQQ NASDAQ 100. It trades about 0.07 of its potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.1 per unit of risk. If you would invest  9,814  in Invesco CoinShares Global on October 22, 2024 and sell it today you would earn a total of  970.00  from holding Invesco CoinShares Global or generate 9.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Invesco CoinShares Global  vs.  Invesco EQQQ NASDAQ 100

Invesco CoinShares Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco CoinShares Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Invesco CoinShares showed solid returns over the last few months and may actually be approaching a breakup point.

Invesco EQQQ NASDAQ

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EQQQ NASDAQ 100 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Invesco EQQQ may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Invesco CoinShares and Invesco EQQQ

The main advantage of trading using opposite Invesco CoinShares and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco CoinShares 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 Invesco CoinShares Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.