Correlation Between Nasdaq 100 and Invesco Steelpath
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Invesco Steelpath 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 Nasdaq 100 and Invesco Steelpath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Invesco Steelpath Mlp, you can compare the effects of market volatilities on Nasdaq 100 and Invesco Steelpath 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 Nasdaq 100 with a short position of Invesco Steelpath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Invesco Steelpath.
Diversification Opportunities for Nasdaq 100 and Invesco Steelpath
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and Invesco is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Invesco Steelpath Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Steelpath Mlp and Nasdaq 100 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 Nasdaq 100 2x Strategy are associated (or correlated) with Invesco Steelpath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Steelpath Mlp has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Invesco Steelpath go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Invesco Steelpath
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.26 times more return on investment than Invesco Steelpath. However, Nasdaq 100 is 2.26 times more volatile than Invesco Steelpath Mlp. It trades about 0.08 of its potential returns per unit of risk. Invesco Steelpath Mlp is currently generating about 0.15 per unit of risk. If you would invest 26,080 in Nasdaq 100 2x Strategy on September 12, 2024 and sell it today you would earn a total of 17,337 from holding Nasdaq 100 2x Strategy or generate 66.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Invesco Steelpath Mlp
Performance |
| Timeline |
| Nasdaq 100 2x |
| Invesco Steelpath Mlp |
Nasdaq 100 and Invesco Steelpath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Invesco Steelpath
The main advantage of trading using opposite Nasdaq 100 and Invesco Steelpath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Invesco Steelpath 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 Steelpath will offset losses from the drop in Invesco Steelpath's long position.| Nasdaq 100 vs. Ambrus Core Bond | Nasdaq 100 vs. Pace High Yield | Nasdaq 100 vs. Franklin High Yield | Nasdaq 100 vs. The National Tax Free |
| Invesco Steelpath vs. Investec Emerging Markets | Invesco Steelpath vs. Barings Emerging Markets | Invesco Steelpath vs. Mid Cap 15x Strategy | Invesco Steelpath vs. Nasdaq 100 2x Strategy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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