Correlation Between Invesco EQQQ and UBSFund Solutions

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

Diversification Opportunities for Invesco EQQQ and UBSFund Solutions

-0.71

Correlation Coefficient

Invesco EQQQ  UBSFund Solutions

Pay attention - limited upside

The 3 months correlation between Invesco and UBSFund is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI 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 UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and UBSFund Solutions go up and down completely randomly.

Pair Corralation between Invesco EQQQ and UBSFund Solutions

Assuming the 90 days trading horizon Invesco EQQQ NASDAQ 100 is expected to generate 1.11 times more return on investment than UBSFund Solutions. However, Invesco EQQQ is 1.11 times more volatile than UBSFund Solutions MSCI. It trades about 0.12 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.03 per unit of risk. If you would invest  27,380  in Invesco EQQQ NASDAQ 100 on September 29, 2024 and sell it today you would earn a total of  24,800  from holding Invesco EQQQ NASDAQ 100 or generate 90.58% return on investment over 90 days.

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

Invesco EQQQ NASDAQ 100  vs.  UBSFund Solutions MSCI

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 weak basic indicators, Invesco EQQQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBSFund Solutions MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBSFund Solutions MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Invesco EQQQ and UBSFund Solutions

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

The idea behind Invesco EQQQ NASDAQ 100 and UBSFund Solutions MSCI 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..