Correlation Between Invesco QQQ and Vanguard
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and Vanguard 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 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 SP 500, you can compare the effects of market volatilities on Invesco QQQ and Vanguard 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and Vanguard.
Diversification Opportunities for Invesco QQQ and Vanguard
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Vanguard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and Vanguard go up and down completely randomly.
Pair Corralation between Invesco QQQ and Vanguard
Considering the 90-day investment horizon Invesco QQQ Trust is expected to generate 1.55 times more return on investment than Vanguard. However, Invesco QQQ is 1.55 times more volatile than Vanguard SP 500. It trades about 0.15 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.15 per unit of risk. If you would invest 52,174 in Invesco QQQ Trust on November 18, 2024 and sell it today you would earn a total of 1,641 from holding Invesco QQQ Trust or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco QQQ Trust vs. Vanguard SP 500
Performance |
| Timeline |
| Invesco QQQ Trust |
| Vanguard SP 500 |
Invesco QQQ and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and Vanguard
The main advantage of trading using opposite Invesco QQQ and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, Vanguard 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 will offset losses from the drop in Vanguard'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 |
| Vanguard vs. Vanguard Total Stock | Vanguard vs. Vanguard High Dividend | Vanguard vs. Vanguard Information Technology | Vanguard vs. Invesco QQQ Trust |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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