Correlation Between IShares SP and QQD
Can any of the company-specific risk be diversified away by investing in both IShares SP and QQD 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 IShares SP and QQD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and QQD, you can compare the effects of market volatilities on IShares SP and QQD 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 IShares SP with a short position of QQD. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and QQD.
Diversification Opportunities for IShares SP and QQD
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and QQD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and QQD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QQD and IShares SP 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 iShares SP 500 are associated (or correlated) with QQD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QQD has no effect on the direction of IShares SP i.e., IShares SP and QQD go up and down completely randomly.
Pair Corralation between IShares SP and QQD
Considering the 90-day investment horizon iShares SP 500 is expected to generate 0.68 times more return on investment than QQD. However, iShares SP 500 is 1.46 times less risky than QQD. It trades about 0.11 of its potential returns per unit of risk. QQD is currently generating about 0.06 per unit of risk. If you would invest 6,145 in iShares SP 500 on September 3, 2024 and sell it today you would earn a total of 4,020 from holding iShares SP 500 or generate 65.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 21.21% |
| Values | Daily Returns |
iShares SP 500 vs. QQD
Performance |
| Timeline |
| iShares SP 500 |
| QQD |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares SP and QQD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and QQD
The main advantage of trading using opposite IShares SP and QQD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, QQD 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 QQD will offset losses from the drop in QQD's long position.| IShares SP vs. Vanguard Growth Index | IShares SP vs. iShares Russell 1000 | IShares SP vs. iShares Core SP | IShares SP vs. Vanguard Mega Cap |
| QQD vs. FT Vest Equity | QQD vs. Zillow Group Class | QQD vs. Northern Lights | QQD vs. VanEck Vectors Moodys |
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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