Correlation Between Check Point and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Check Point 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 Check Point and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Invesco QQQ Trust, you can compare the effects of market volatilities on Check Point 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 Check Point with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Invesco QQQ.
Diversification Opportunities for Check Point and Invesco QQQ
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Check and Invesco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software 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 Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Invesco QQQ go up and down completely randomly.
Pair Corralation between Check Point and Invesco QQQ
Given the investment horizon of 90 days Check Point is expected to generate 1.19 times less return on investment than Invesco QQQ. But when comparing it to its historical volatility, Check Point Software is 1.09 times less risky than Invesco QQQ. It trades about 0.05 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30,857 in Invesco QQQ Trust on January 25, 2024 and sell it today you would earn a total of 11,650 from holding Invesco QQQ Trust or generate 37.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Check Point Software vs. Invesco QQQ Trust
Performance |
Timeline |
Check Point Software |
Invesco QQQ Trust |
Check Point and Invesco QQQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Check Point and Invesco QQQ
The main advantage of trading using opposite Check Point and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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.Check Point vs. Block Inc | Check Point vs. Adobe Systems Incorporated | Check Point vs. Crowdstrike Holdings | Check Point vs. Cloudflare |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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