Correlation Between Cognex and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Cognex and Invesco QQQ 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 Cognex and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognex and Invesco QQQ Trust, you can compare the effects of market volatilities on Cognex and Invesco QQQ 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 Cognex with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Invesco QQQ.
Diversification Opportunities for Cognex and Invesco QQQ
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognex and Invesco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust and Cognex 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 Cognex are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Cognex i.e., Cognex and Invesco QQQ go up and down completely randomly.
Pair Corralation between Cognex and Invesco QQQ
Given the investment horizon of 90 days Cognex is expected to under-perform the Invesco QQQ. In addition to that, Cognex is 1.83 times more volatile than Invesco QQQ Trust. It trades about -0.19 of its total potential returns per unit of risk. Invesco QQQ Trust is currently generating about -0.25 per unit of volatility. If you would invest 44,377 in Invesco QQQ Trust on January 20, 2024 and sell it today you would lose (2,036) from holding Invesco QQQ Trust or give up 4.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognex vs. Invesco QQQ Trust
Performance |
| Timeline |
| Cognex |
| Invesco QQQ Trust |
Cognex and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognex and Invesco QQQ
The main advantage of trading using opposite Cognex and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex position performs unexpectedly, Invesco QQQ 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 QQQ will offset losses from the drop in Invesco QQQ's long position.The idea behind Cognex and Invesco QQQ Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. NVIDIA | Invesco QQQ vs. SPDR Dow Jones |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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