Correlation Between BetaPro NASDAQ and Invesco SP
Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and Invesco SP 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 BetaPro NASDAQ and Invesco SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BetaPro NASDAQ 100 2x and Invesco SP 500, you can compare the effects of market volatilities on BetaPro NASDAQ and Invesco SP 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 BetaPro NASDAQ with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and Invesco SP.
Diversification Opportunities for BetaPro NASDAQ and Invesco SP
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BetaPro and Invesco is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and BetaPro NASDAQ 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 BetaPro NASDAQ 100 2x are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and Invesco SP go up and down completely randomly.
Pair Corralation between BetaPro NASDAQ and Invesco SP
Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to generate 3.08 times more return on investment than Invesco SP. However, BetaPro NASDAQ is 3.08 times more volatile than Invesco SP 500. It trades about -0.01 of its potential returns per unit of risk. Invesco SP 500 is currently generating about -0.06 per unit of risk. If you would invest 1,007 in BetaPro NASDAQ 100 2x on October 9, 2024 and sell it today you would lose (13.00) from holding BetaPro NASDAQ 100 2x or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BetaPro NASDAQ 100 2x vs. Invesco SP 500
Performance |
| Timeline |
| BetaPro NASDAQ 100 |
| Invesco SP 500 |
BetaPro NASDAQ and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BetaPro NASDAQ and Invesco SP
The main advantage of trading using opposite BetaPro NASDAQ and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro NASDAQ position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.| BetaPro NASDAQ vs. BetaPro SPTSX 60 | BetaPro NASDAQ vs. BetaPro SP 500 | BetaPro NASDAQ vs. BetaPro SP TSX | BetaPro NASDAQ vs. BetaPro SP TSX |
| Invesco SP vs. Invesco SP 500 | Invesco SP vs. BMO MSCI EAFE | Invesco SP vs. BMO MSCI USA | Invesco SP vs. iShares ESG Aware |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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