Correlation Between Invesco QQQ and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and IShares MSCI 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 Invesco QQQ and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco QQQ Trust and iShares MSCI USA, you can compare the effects of market volatilities on Invesco QQQ and IShares MSCI 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 Invesco QQQ with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and IShares MSCI.
Diversification Opportunities for Invesco QQQ and IShares MSCI
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA and Invesco QQQ 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 Invesco QQQ Trust are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and IShares MSCI go up and down completely randomly.
Pair Corralation between Invesco QQQ and IShares MSCI
Considering the 90-day investment horizon Invesco QQQ is expected to generate 1.34 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Invesco QQQ Trust is 1.14 times less risky than IShares MSCI. It trades about 0.18 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 13,495 in iShares MSCI USA on January 25, 2024 and sell it today you would earn a total of 4,412 from holding iShares MSCI USA or generate 32.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco QQQ Trust vs. iShares MSCI USA
Performance |
Timeline |
Invesco QQQ Trust |
iShares MSCI USA |
Invesco QQQ and IShares MSCI Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco QQQ and IShares MSCI
The main advantage of trading using opposite Invesco QQQ and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.Invesco QQQ vs. iShares Small Cap | Invesco QQQ vs. Pacer Cash Cows | Invesco QQQ vs. GXO Logistics | Invesco QQQ vs. Amplify CWP Enhanced |
IShares MSCI vs. iShares Small Cap | IShares MSCI vs. Pacer Cash Cows | IShares MSCI vs. GXO Logistics | IShares MSCI vs. Amplify CWP Enhanced |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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