Correlation Between Invesco EQQQ and Amundi Index

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

Diversification Opportunities for Invesco EQQQ and Amundi Index

0.76

Correlation Coefficient

Invesco EQQQ  Amundi Index

Poor diversification

The 3 months correlation between Invesco and Amundi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and Amundi Index go up and down completely randomly.

Pair Corralation between Invesco EQQQ and Amundi Index

Assuming the 90 days trading horizon Invesco EQQQ NASDAQ 100 is expected to generate 1.03 times more return on investment than Amundi Index. However, Invesco EQQQ is 1.03 times more volatile than Amundi Index Solutions. It trades about 0.22 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.12 per unit of risk. If you would invest  43,918  in Invesco EQQQ NASDAQ 100 on October 3, 2024 and sell it today you would earn a total of  6,102  from holding Invesco EQQQ NASDAQ 100 or generate 13.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Invesco EQQQ NASDAQ 100  vs.  Amundi Index Solutions

Invesco EQQQ NASDAQ

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco EQQQ NASDAQ 100 are ranked lower than 16 (%) 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.

Amundi Index Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amundi Index may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Invesco EQQQ and Amundi Index

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

The idea behind Invesco EQQQ NASDAQ 100 and Amundi Index Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.