Correlation Between Invesco EQQQ and Xtrackers MSCI

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

Diversification Opportunities for Invesco EQQQ and Xtrackers MSCI

-0.18

Correlation Coefficient

Invesco EQQQ  Xtrackers MSCI

Good diversification

The 3 months correlation between Invesco and Xtrackers is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and Xtrackers MSCI AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI AC 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI AC has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Invesco EQQQ and Xtrackers MSCI

Assuming the 90 days trading horizon Invesco EQQQ NASDAQ 100 is expected to under-perform the Xtrackers MSCI. In addition to that, Invesco EQQQ is 1.09 times more volatile than Xtrackers MSCI AC. It trades about -0.06 of its total potential returns per unit of risk. Xtrackers MSCI AC is currently generating about 0.11 per unit of volatility. If you would invest  4,220  in Xtrackers MSCI AC on December 25, 2024 and sell it today you would earn a total of  345.00  from holding Xtrackers MSCI AC or generate 8.18% return on investment over 90 days.

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

Invesco EQQQ NASDAQ 100  vs.  Xtrackers MSCI AC

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.

Xtrackers MSCI AC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI AC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xtrackers MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco EQQQ and Xtrackers MSCI

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

The idea behind Invesco EQQQ NASDAQ 100 and Xtrackers MSCI AC 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 CEOs Directory module to screen CEOs from public companies around the world.