Correlation Between Invesco QQQ and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Invesco QQQ and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and SPDR Portfolio.
Diversification Opportunities for Invesco QQQ and SPDR Portfolio
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and SPDR is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Invesco QQQ and SPDR Portfolio
Considering the 90-day investment horizon Invesco QQQ Trust is expected to under-perform the SPDR Portfolio. In addition to that, Invesco QQQ is 1.01 times more volatile than SPDR Portfolio SP. It trades about -0.17 of its total potential returns per unit of risk. SPDR Portfolio SP is currently generating about -0.16 per unit of volatility. If you would invest 7,313 in SPDR Portfolio SP on January 26, 2024 and sell it today you would lose (265.00) from holding SPDR Portfolio SP or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Invesco QQQ Trust vs. SPDR Portfolio SP
Performance |
| Timeline |
| Invesco QQQ Trust |
| SPDR Portfolio SP |
Invesco QQQ and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and SPDR Portfolio
The main advantage of trading using opposite Invesco QQQ and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, SPDR Portfolio 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 SPDR Portfolio will offset losses from the drop in SPDR Portfolio'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 |
| SPDR Portfolio vs. iShares Small Cap | SPDR Portfolio vs. Pacer Cash Cows | SPDR Portfolio vs. GXO Logistics | SPDR Portfolio 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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