Correlation Between Invesco EQQQ and IShares Asia

Can any of the company-specific risk be diversified away by investing in both Invesco EQQQ and IShares Asia 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 IShares Asia 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 iShares Asia Pacific, you can compare the effects of market volatilities on Invesco EQQQ and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco EQQQ and IShares Asia.

Diversification Opportunities for Invesco EQQQ and IShares Asia

-0.62

Correlation Coefficient

Invesco EQQQ  IShares Asia

Excellent diversification

The 3 months correlation between Invesco and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and iShares Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Pacific 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 IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Pacific has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and IShares Asia go up and down completely randomly.

Pair Corralation between Invesco EQQQ and IShares Asia

Assuming the 90 days trading horizon Invesco EQQQ NASDAQ 100 is expected to generate 1.0 times more return on investment than IShares Asia. However, Invesco EQQQ is 1.0 times more volatile than iShares Asia Pacific. It trades about -0.09 of its potential returns per unit of risk. iShares Asia Pacific is currently generating about -0.23 per unit of risk. If you would invest  36,750  in Invesco EQQQ NASDAQ 100 on October 7, 2024 and sell it today you would lose (545.00) from holding Invesco EQQQ NASDAQ 100 or give up 1.48% of portfolio value over 90 days.

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

Invesco EQQQ NASDAQ 100  vs.  iShares Asia Pacific

Invesco EQQQ NASDAQ

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EQQQ NASDAQ 100 are ranked lower than 9 (%) 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.

iShares Asia Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Asia Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Pair Trading with Invesco EQQQ and IShares Asia

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

The idea behind Invesco EQQQ NASDAQ 100 and iShares Asia Pacific 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.