Correlation Between ZKB Palladium and Invesco EQQQ

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

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

Diversification Opportunities for ZKB Palladium and Invesco EQQQ

-0.36

Correlation Coefficient

ZKB Palladium  Invesco EQQQ

Very good diversification

The 3 months correlation between ZKB and Invesco is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Palladium ETF 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 ZKB Palladium 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 ZKB Palladium ETF 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 ZKB Palladium i.e., ZKB Palladium and Invesco EQQQ go up and down completely randomly.

Pair Corralation between ZKB Palladium and Invesco EQQQ

Assuming the 90 days trading horizon ZKB Palladium ETF is expected to under-perform the Invesco EQQQ. In addition to that, ZKB Palladium is 1.85 times more volatile than Invesco EQQQ NASDAQ 100. It trades about -0.11 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

ZKB Palladium ETF  vs.  Invesco EQQQ NASDAQ 100

ZKB Palladium ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Palladium ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ZKB Palladium is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated 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 ZKB Palladium and Invesco EQQQ

The main advantage of trading using opposite ZKB Palladium and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKB Palladium 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 ZKB Palladium ETF 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.