Correlation Between Invesco QQQ and First Trust
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and First Trust 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 First Trust 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 First Trust Brazil, you can compare the effects of market volatilities on Invesco QQQ and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and First Trust.
Diversification Opportunities for Invesco QQQ and First Trust
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Invesco and First is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and First Trust Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Brazil 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Brazil has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and First Trust go up and down completely randomly.
Pair Corralation between Invesco QQQ and First Trust
Considering the 90-day investment horizon Invesco QQQ Trust is expected to generate 0.67 times more return on investment than First Trust. However, Invesco QQQ Trust is 1.49 times less risky than First Trust. It trades about 0.03 of its potential returns per unit of risk. First Trust Brazil is currently generating about 0.01 per unit of risk. If you would invest 51,604 in Invesco QQQ Trust on November 3, 2024 and sell it today you would earn a total of 701.00 from holding Invesco QQQ Trust or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco QQQ Trust vs. First Trust Brazil
Performance |
| Timeline |
| Invesco QQQ Trust |
| First Trust Brazil |
Invesco QQQ and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and First Trust
The main advantage of trading using opposite Invesco QQQ and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. iShares Russell 2000 | Invesco QQQ vs. SPDR Dow Jones |
| First Trust vs. First Trust Latin | First Trust vs. First Trust Germany | First Trust vs. First Trust Japan | First Trust vs. First Trust Asia |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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