Correlation Between UBS ETF and Invesco EQQQ

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

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

Diversification Opportunities for UBS ETF and Invesco EQQQ

-0.61

Correlation Coefficient

UBS ETF  Invesco EQQQ

Excellent diversification

The 3 months correlation between UBS and Invesco is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF Palladium and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ and UBS ETF 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 UBS ETF Palladium are associated (or correlated) with Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of UBS ETF i.e., UBS ETF and Invesco EQQQ go up and down completely randomly.

Pair Corralation between UBS ETF and Invesco EQQQ

Assuming the 90 days trading horizon UBS ETF Palladium is expected to under-perform the Invesco EQQQ. In addition to that, UBS ETF is 1.42 times more volatile than Invesco EQQQ NASDAQ 100. It trades about -0.2 of its total potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.18 per unit of volatility. If you would invest  50,497  in Invesco EQQQ NASDAQ 100 on September 28, 2024 and sell it today you would earn a total of  1,753  from holding Invesco EQQQ NASDAQ 100 or generate 3.47% return on investment over 90 days.

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

UBS ETF Palladium  vs.  Invesco EQQQ NASDAQ 100

UBS ETF Palladium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETF Palladium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

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.

Pair Trading with UBS ETF and Invesco EQQQ

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

The idea behind UBS ETF Palladium and Invesco EQQQ 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.