Correlation Between Invesco QQQ and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort SP500, you can compare the effects of market volatilities on Invesco QQQ and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and ProShares UltraShort.
Diversification Opportunities for Invesco QQQ and ProShares UltraShort
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Invesco and ProShares is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and ProShares UltraShort SP500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Invesco QQQ and ProShares UltraShort
Considering the 90-day investment horizon Invesco QQQ Trust is expected to generate 0.72 times more return on investment than ProShares UltraShort. However, Invesco QQQ Trust is 1.4 times less risky than ProShares UltraShort. It trades about 0.0 of its potential returns per unit of risk. ProShares UltraShort SP500 is currently generating about 0.0 per unit of risk. If you would invest 42,676 in Invesco QQQ Trust on January 19, 2024 and sell it today you would lose (92.00) from holding Invesco QQQ Trust or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco QQQ Trust vs. ProShares UltraShort SP500
Performance |
| Timeline |
| Invesco QQQ Trust |
| ProShares UltraShort |
Invesco QQQ and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and ProShares UltraShort
The main advantage of trading using opposite Invesco QQQ and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort's long position.| Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. NVIDIA | Invesco QQQ vs. SPDR Dow Jones |
| ProShares UltraShort vs. ProShares UltraShort QQQ | ProShares UltraShort vs. ProShares Ultra SP500 | ProShares UltraShort vs. HUMANA INC | ProShares UltraShort vs. Aquagold International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |