Correlation Between SPDR Dow and Invesco EQQQ
Can any of the company-specific risk be diversified away by investing in both SPDR Dow 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 SPDR Dow and Invesco EQQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on SPDR Dow 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 SPDR Dow with a short position of Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and Invesco EQQQ.
Diversification Opportunities for SPDR Dow and Invesco EQQQ
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SPDR and Invesco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones 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 SPDR Dow 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 SPDR Dow Jones 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 SPDR Dow i.e., SPDR Dow and Invesco EQQQ go up and down completely randomly.
Pair Corralation between SPDR Dow and Invesco EQQQ
Assuming the 90 days trading horizon SPDR Dow is expected to generate 6.53 times less return on investment than Invesco EQQQ. But when comparing it to its historical volatility, SPDR Dow Jones is 1.31 times less risky than Invesco EQQQ. It trades about 0.01 of its potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 35,815 in Invesco EQQQ NASDAQ 100 on November 7, 2024 and sell it today you would earn a total of 900.00 from holding Invesco EQQQ NASDAQ 100 or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Dow Jones vs. Invesco EQQQ NASDAQ 100
Performance |
| Timeline |
| SPDR Dow Jones |
| Invesco EQQQ NASDAQ |
SPDR Dow and Invesco EQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Dow and Invesco EQQQ
The main advantage of trading using opposite SPDR Dow and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow 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.| SPDR Dow vs. UBSFund Solutions MSCI | SPDR Dow vs. Vanguard SP 500 | SPDR Dow vs. iShares VII PLC | SPDR Dow vs. iShares Core SP |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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