Correlation Between Invesco QQQ and Vanguard Index
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and Vanguard Index 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 QQQ and Vanguard Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco QQQ Trust and Vanguard Index Funds, you can compare the effects of market volatilities on Invesco QQQ and Vanguard Index 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 QQQ with a short position of Vanguard Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and Vanguard Index.
Diversification Opportunities for Invesco QQQ and Vanguard Index
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Vanguard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and Vanguard Index Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Index Funds and Invesco QQQ 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 QQQ Trust are associated (or correlated) with Vanguard Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Index Funds has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and Vanguard Index go up and down completely randomly.
Pair Corralation between Invesco QQQ and Vanguard Index
Assuming the 90 days trading horizon Invesco QQQ is expected to generate 1.33 times less return on investment than Vanguard Index. But when comparing it to its historical volatility, Invesco QQQ Trust is 1.08 times less risky than Vanguard Index. It trades about 0.16 of its potential returns per unit of risk. Vanguard Index Funds is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 373,833 in Vanguard Index Funds on September 2, 2024 and sell it today you would earn a total of 146,167 from holding Vanguard Index Funds or generate 39.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Invesco QQQ Trust vs. Vanguard Index Funds
Performance |
| Timeline |
| Invesco QQQ Trust |
| Vanguard Index Funds |
Invesco QQQ and Vanguard Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and Vanguard Index
The main advantage of trading using opposite Invesco QQQ and Vanguard Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, Vanguard Index 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 Vanguard Index will offset losses from the drop in Vanguard Index's long position.| Invesco QQQ vs. Invesco DB Multi Sector | Invesco QQQ vs. Invesco DB Multi Sector | Invesco QQQ vs. Invesco CurrencyShares Japanese | Invesco QQQ vs. Invesco DB Dollar |
| Vanguard Index vs. Promotora y Operadora | Vanguard Index vs. UnitedHealth Group Incorporated | Vanguard Index vs. Qulitas Controladora SAB | Vanguard Index 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |