Correlation Between QQQN and Invesco NASDAQ

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

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

Diversification Opportunities for QQQN and Invesco NASDAQ

0.0

Correlation Coefficient

QQQN  Invesco NASDAQ

Pay attention - limited upside

The 3 months correlation between QQQN and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding QQQN and Invesco NASDAQ Next in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ Next and QQQN 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 QQQN 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 Next has no effect on the direction of QQQN i.e., QQQN and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between QQQN and Invesco NASDAQ

If you would invest (100.00) in QQQN on December 30, 2024 and sell it today you would earn a total of  100.00  from holding QQQN or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

QQQN  vs.  Invesco NASDAQ Next

QQQN

Risk-Adjusted Performance

Very Weak

Over the last 90 days QQQN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, QQQN is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Invesco NASDAQ Next

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco NASDAQ Next has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Invesco NASDAQ is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with QQQN and Invesco NASDAQ

The main advantage of trading using opposite QQQN and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QQQN 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 QQQN and Invesco NASDAQ Next 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.