Correlation Between Nasdaq-100 Index and Invesco Technology
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and Invesco Technology 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 Index and Invesco Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Invesco Technology Fund, you can compare the effects of market volatilities on Nasdaq-100 Index and Invesco Technology 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 Index with a short position of Invesco Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Invesco Technology.
Diversification Opportunities for Nasdaq-100 Index and Invesco Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq-100 and Invesco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Invesco Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Technology and Nasdaq-100 Index 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 Index Fund are associated (or correlated) with Invesco Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Technology has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and Invesco Technology go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Invesco Technology
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to under-perform the Invesco Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nasdaq 100 Index Fund is 1.64 times less risky than Invesco Technology. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Invesco Technology Fund is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,761 in Invesco Technology Fund on November 7, 2024 and sell it today you would lose (26.00) from holding Invesco Technology Fund or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Invesco Technology Fund
Performance |
| Timeline |
| Nasdaq 100 Index |
| Invesco Technology |
Nasdaq-100 Index and Invesco Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Invesco Technology
The main advantage of trading using opposite Nasdaq-100 Index and Invesco Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, Invesco Technology 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 Technology will offset losses from the drop in Invesco Technology's long position.| Nasdaq-100 Index vs. The Hartford Growth | Nasdaq-100 Index vs. Growth Allocation Fund | Nasdaq-100 Index vs. Eip Growth And | Nasdaq-100 Index vs. T Rowe Price |
| Invesco Technology vs. T Rowe Price | Invesco Technology vs. T Rowe Price | Invesco Technology vs. Baird Quality Intermediate | Invesco Technology vs. Transamerica Intermediate Muni |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |