Correlation Between Amundi CAC and Invesco EQQQ

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

By analyzing existing cross correlation between Amundi CAC 40 and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Amundi CAC 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 Amundi CAC with a short position of Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi CAC and Invesco EQQQ.

Diversification Opportunities for Amundi CAC and Invesco EQQQ

-0.66

Correlation Coefficient

Amundi CAC  Invesco EQQQ

Excellent diversification

The 3 months correlation between Amundi and Invesco is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Amundi CAC 40 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 Amundi CAC 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 Amundi CAC 40 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 Amundi CAC i.e., Amundi CAC and Invesco EQQQ go up and down completely randomly.

Pair Corralation between Amundi CAC and Invesco EQQQ

Assuming the 90 days trading horizon Amundi CAC 40 is expected to under-perform the Invesco EQQQ. But the etf apears to be less risky and, when comparing its historical volatility, Amundi CAC 40 is 1.24 times less risky than Invesco EQQQ. The etf trades about -0.11 of its potential returns per unit of risk. The Invesco EQQQ NASDAQ 100 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  43,778  in Invesco EQQQ NASDAQ 100 on September 26, 2024 and sell it today you would earn a total of  6,952  from holding Invesco EQQQ NASDAQ 100 or generate 15.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Amundi CAC 40  vs.  Invesco EQQQ NASDAQ 100

Amundi CAC 40

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi CAC 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Amundi CAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Invesco EQQQ NASDAQ

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EQQQ NASDAQ 100 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Invesco EQQQ sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amundi CAC and Invesco EQQQ

The main advantage of trading using opposite Amundi CAC and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi CAC 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 Amundi CAC 40 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 Transaction History module to view history of all your transactions and understand their impact on performance.