Correlation Between UBS ETF and Invesco EQQQ

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

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

Diversification Opportunities for UBS ETF and Invesco EQQQ

0.25

Correlation Coefficient

UBS ETF  Invesco EQQQ

Modest diversification

The 3 months correlation between UBS and Invesco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI 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 UBS ETF 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 UBS ETF MSCI 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 UBS ETF i.e., UBS ETF and Invesco EQQQ go up and down completely randomly.

Pair Corralation between UBS ETF and Invesco EQQQ

Assuming the 90 days trading horizon UBS ETF MSCI is expected to generate 0.46 times more return on investment than Invesco EQQQ. However, UBS ETF MSCI is 2.17 times less risky than Invesco EQQQ. It trades about 0.23 of its potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about -0.12 per unit of risk. If you would invest  1,992  in UBS ETF MSCI on December 5, 2024 and sell it today you would earn a total of  120.00  from holding UBS ETF MSCI or generate 6.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

UBS ETF MSCI  vs.  Invesco EQQQ NASDAQ 100

UBS ETF MSCI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF MSCI are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UBS ETF 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

Very Weak

Over the last 90 days Invesco EQQQ NASDAQ 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Invesco EQQQ is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with UBS ETF and Invesco EQQQ

The main advantage of trading using opposite UBS ETF and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF 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 UBS ETF MSCI 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..