Correlation Between Invesco QQQ and IndexIQ

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

Diversification Opportunities for Invesco QQQ and IndexIQ

0.8

Correlation Coefficient

Invesco QQQ  IndexIQ

Very poor diversification

The 3 months correlation between Invesco and IndexIQ is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and IndexIQ go up and down completely randomly.

Pair Corralation between Invesco QQQ and IndexIQ

If you would invest  50,002  in Invesco QQQ Trust on September 19, 2024 and sell it today you would earn a total of  3,578  from holding Invesco QQQ Trust or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Invesco QQQ Trust  vs.  IndexIQ

Invesco QQQ Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco QQQ Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Invesco QQQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IndexIQ is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Invesco QQQ and IndexIQ

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

The idea behind Invesco QQQ Trust and IndexIQ 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.