Correlation Between Invesco EQQQ and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both Invesco EQQQ and SPDR FTSE 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 EQQQ and SPDR FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco EQQQ NASDAQ 100 and SPDR FTSE UK, you can compare the effects of market volatilities on Invesco EQQQ and SPDR FTSE 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 EQQQ with a short position of SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco EQQQ and SPDR FTSE.
Diversification Opportunities for Invesco EQQQ and SPDR FTSE
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and SPDR is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Invesco EQQQ NASDAQ 100 and SPDR FTSE UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE UK and Invesco EQQQ 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 EQQQ NASDAQ 100 are associated (or correlated) with SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE UK has no effect on the direction of Invesco EQQQ i.e., Invesco EQQQ and SPDR FTSE go up and down completely randomly.
Pair Corralation between Invesco EQQQ and SPDR FTSE
Assuming the 90 days trading horizon Invesco EQQQ is expected to generate 1.8 times less return on investment than SPDR FTSE. In addition to that, Invesco EQQQ is 1.76 times more volatile than SPDR FTSE UK. It trades about 0.04 of its total potential returns per unit of risk. SPDR FTSE UK is currently generating about 0.14 per unit of volatility. If you would invest 606.00 in SPDR FTSE UK on November 7, 2024 and sell it today you would earn a total of 31.00 from holding SPDR FTSE UK or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco EQQQ NASDAQ 100 vs. SPDR FTSE UK
Performance |
| Timeline |
| Invesco EQQQ NASDAQ |
| SPDR FTSE UK |
Invesco EQQQ and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco EQQQ and SPDR FTSE
The main advantage of trading using opposite Invesco EQQQ and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco EQQQ position performs unexpectedly, SPDR FTSE 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 SPDR FTSE will offset losses from the drop in SPDR FTSE's long position.The idea behind Invesco EQQQ NASDAQ 100 and SPDR FTSE UK 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.| SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR SP Utilities | SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR MSCI EM |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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