Correlation Between Renaissance IPO and Invesco NASDAQ

Can any of the company-specific risk be diversified away by investing in both Renaissance IPO and Invesco NASDAQ 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 Renaissance IPO and Invesco NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Renaissance IPO ETF and Invesco NASDAQ 100, you can compare the effects of market volatilities on Renaissance IPO and Invesco NASDAQ 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 Renaissance IPO with a short position of Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renaissance IPO and Invesco NASDAQ.

Diversification Opportunities for Renaissance IPO and Invesco NASDAQ

0.92

Correlation Coefficient

Renaissance IPO  Invesco NASDAQ

Almost no diversification

The 3 months correlation between Renaissance and Invesco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Renaissance IPO ETF and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 and Renaissance IPO 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 Renaissance IPO ETF are associated (or correlated) with Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of Renaissance IPO i.e., Renaissance IPO and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between Renaissance IPO and Invesco NASDAQ

Considering the 90-day investment horizon Renaissance IPO is expected to generate 1.04 times less return on investment than Invesco NASDAQ. In addition to that, Renaissance IPO is 1.12 times more volatile than Invesco NASDAQ 100. It trades about 0.15 of its total potential returns per unit of risk. Invesco NASDAQ 100 is currently generating about 0.17 per unit of volatility. If you would invest  19,448  in Invesco NASDAQ 100 on September 12, 2024 and sell it today you would earn a total of  1,980  from holding Invesco NASDAQ 100 or generate 10.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Renaissance IPO ETF  vs.  Invesco NASDAQ 100

Renaissance IPO ETF

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Renaissance IPO ETF are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Renaissance IPO may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco NASDAQ 100

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco NASDAQ 100 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, Invesco NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Renaissance IPO and Invesco NASDAQ

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

The idea behind Renaissance IPO ETF and Invesco NASDAQ 100 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.