Correlation Between Invesco QQQ and Defiance ETFs

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

Diversification Opportunities for Invesco QQQ and Defiance ETFs

-0.35

Correlation Coefficient

Invesco QQQ  Defiance ETFs

Very good diversification

The 3 months correlation between Invesco and Defiance is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs 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 Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and Defiance ETFs go up and down completely randomly.

Pair Corralation between Invesco QQQ and Defiance ETFs

If you would invest  47,283  in Invesco QQQ Trust on September 17, 2024 and sell it today you would earn a total of  5,770  from holding Invesco QQQ Trust or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Invesco QQQ Trust  vs.  Defiance ETFs

Invesco QQQ Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco QQQ Trust are ranked lower than 15 (%) 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.

Defiance ETFs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Defiance ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco QQQ and Defiance ETFs

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

The idea behind Invesco QQQ Trust and Defiance ETFs 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.