Correlation Between Invesco QQQ and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and IShares 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 IShares 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 iShares Trust, you can compare the effects of market volatilities on Invesco QQQ and IShares 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and IShares Trust.
Diversification Opportunities for Invesco QQQ and IShares Trust
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and IShares Trust go up and down completely randomly.
Pair Corralation between Invesco QQQ and IShares Trust
Considering the 90-day investment horizon Invesco QQQ Trust is expected to generate 1.52 times more return on investment than IShares Trust. However, Invesco QQQ is 1.52 times more volatile than iShares Trust. It trades about 0.13 of its potential returns per unit of risk. iShares Trust is currently generating about 0.15 per unit of risk. If you would invest 26,438 in Invesco QQQ Trust on September 13, 2024 and sell it today you would earn a total of 26,554 from holding Invesco QQQ Trust or generate 100.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 58.7% |
| Values | Daily Returns |
Invesco QQQ Trust vs. iShares Trust
Performance |
| Timeline |
| Invesco QQQ Trust |
| iShares Trust |
Invesco QQQ and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and IShares Trust
The main advantage of trading using opposite Invesco QQQ and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, IShares 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 IShares Trust will offset losses from the drop in IShares 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 |
| IShares Trust vs. First Trust Multi Asset | IShares Trust vs. Collaborative Investment Series | IShares Trust vs. EA Series Trust | IShares Trust vs. Aptus Defined Risk |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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