Correlation Between Costamare and Invesco QQQ

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Can any of the company-specific risk be diversified away by investing in both Costamare 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 Costamare and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costamare and Invesco QQQ Trust, you can compare the effects of market volatilities on Costamare 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 Costamare with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costamare and Invesco QQQ.

Diversification Opportunities for Costamare and Invesco QQQ

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Costamare and Invesco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Costamare 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 Costamare 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 Costamare 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 Costamare i.e., Costamare and Invesco QQQ go up and down completely randomly.

Pair Corralation between Costamare and Invesco QQQ

Given the investment horizon of 90 days Costamare is expected to under-perform the Invesco QQQ. In addition to that, Costamare is 1.67 times more volatile than Invesco QQQ Trust. It trades about 0.0 of its total potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.04 per unit of volatility. If you would invest  34,420  in Invesco QQQ Trust on December 29, 2023 and sell it today you would earn a total of  9,981  from holding Invesco QQQ Trust or generate 29.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Costamare  vs.  Invesco QQQ Trust

 Performance 
       Timeline  
Costamare 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Costamare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Costamare may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Invesco QQQ Trust 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco QQQ Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Invesco QQQ may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Costamare and Invesco QQQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Costamare and Invesco QQQ

The main advantage of trading using opposite Costamare and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costamare 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 Costamare 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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