Correlation Between Invesco EQQQ and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Invesco EQQQ and Dow Jones 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 EQQQ and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco EQQQ NASDAQ 100 and Dow Jones Industrial, you can compare the effects of market volatilities on Invesco EQQQ and Dow Jones 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 EQQQ with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco EQQQ and Dow Jones.
Diversification Opportunities for Invesco EQQQ and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Invesco EQQQ 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 EQQQ NASDAQ 100 are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and Dow Jones go up and down completely randomly.
Pair Corralation between Invesco EQQQ and Dow Jones
Assuming the 90 days trading horizon Invesco EQQQ NASDAQ 100 is expected to generate 1.21 times more return on investment than Dow Jones. However, Invesco EQQQ is 1.21 times more volatile than Dow Jones Industrial. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 33,205 in Invesco EQQQ NASDAQ 100 on September 17, 2024 and sell it today you would earn a total of 3,840 from holding Invesco EQQQ NASDAQ 100 or generate 11.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.46% |
Values | Daily Returns |
Invesco EQQQ NASDAQ 100 vs. Dow Jones Industrial
Performance |
Timeline |
Invesco EQQQ and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Invesco EQQQ NASDAQ 100
Pair trading matchups for Invesco EQQQ
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Invesco EQQQ and Dow Jones
The main advantage of trading using opposite Invesco EQQQ and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco EQQQ position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Invesco EQQQ vs. Baloise Holding AG | Invesco EQQQ vs. 21Shares Polkadot ETP | Invesco EQQQ vs. UBS ETF MSCI | Invesco EQQQ vs. BB Biotech AG |
Dow Jones vs. Awilco Drilling PLC | Dow Jones vs. Dine Brands Global | Dow Jones vs. Meli Hotels International | Dow Jones vs. Boyd Gaming |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |