Correlation Between Invesco QQQ and ProShares Trust
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and ProShares Trust 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 QQQ and ProShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco QQQ Trust and ProShares Trust , you can compare the effects of market volatilities on Invesco QQQ and ProShares Trust 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 QQQ with a short position of ProShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and ProShares Trust.
Diversification Opportunities for Invesco QQQ and ProShares Trust
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Invesco and ProShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and ProShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Trust and Invesco QQQ 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 QQQ Trust are associated (or correlated) with ProShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Trust has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and ProShares Trust go up and down completely randomly.
Pair Corralation between Invesco QQQ and ProShares Trust
Assuming the 90 days trading horizon Invesco QQQ Trust is expected to generate 0.53 times more return on investment than ProShares Trust. However, Invesco QQQ Trust is 1.88 times less risky than ProShares Trust. It trades about -0.13 of its potential returns per unit of risk. ProShares Trust is currently generating about -0.14 per unit of risk. If you would invest 1,066,540 in Invesco QQQ Trust on December 30, 2024 and sell it today you would lose (109,810) from holding Invesco QQQ Trust or give up 10.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco QQQ Trust vs. ProShares Trust
Performance |
Timeline |
Invesco QQQ Trust |
ProShares Trust |
Invesco QQQ and ProShares Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco QQQ and ProShares Trust
The main advantage of trading using opposite Invesco QQQ and ProShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, ProShares Trust 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 ProShares Trust will offset losses from the drop in ProShares Trust's long position.Invesco QQQ vs. Invesco DB Multi Sector | Invesco QQQ vs. Invesco DB Multi Sector | Invesco QQQ vs. Invesco CurrencyShares Japanese | Invesco QQQ vs. Invesco DB Dollar |
ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust | ProShares Trust vs. ProShares Trust |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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