Correlation Between Microsoft and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Microsoft and Invesco QQQ 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 Microsoft and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Invesco QQQ Trust, you can compare the effects of market volatilities on Microsoft and Invesco QQQ 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 Microsoft with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Invesco QQQ.
Diversification Opportunities for Microsoft and Invesco QQQ
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Invesco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust and Microsoft 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 Microsoft are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Microsoft i.e., Microsoft and Invesco QQQ go up and down completely randomly.
Pair Corralation between Microsoft and Invesco QQQ
Given the investment horizon of 90 days Microsoft is expected to under-perform the Invesco QQQ. In addition to that, Microsoft is 1.15 times more volatile than Invesco QQQ Trust. It trades about -0.04 of its total potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.15 per unit of volatility. If you would invest 1,002,145 in Invesco QQQ Trust on August 31, 2024 and sell it today you would earn a total of 47,355 from holding Invesco QQQ Trust or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. Invesco QQQ Trust
Performance |
| Timeline |
| Microsoft |
| Invesco QQQ Trust |
Microsoft and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Invesco QQQ
The main advantage of trading using opposite Microsoft and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Invesco QQQ 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 QQQ will offset losses from the drop in Invesco QQQ's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Invesco QQQ vs. Promotora y Operadora | Invesco QQQ vs. UnitedHealth Group Incorporated | Invesco QQQ vs. Qulitas Controladora SAB | Invesco QQQ vs. Hoteles City Express |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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