Correlation Between Invesco QQQ and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Invesco QQQ and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and Summit Materials.
Diversification Opportunities for Invesco QQQ and Summit Materials
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Summit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and Summit Materials go up and down completely randomly.
Pair Corralation between Invesco QQQ and Summit Materials
Considering the 90-day investment horizon Invesco QQQ Trust is expected to generate 0.7 times more return on investment than Summit Materials. However, Invesco QQQ Trust is 1.43 times less risky than Summit Materials. It trades about -0.3 of its potential returns per unit of risk. Summit Materials is currently generating about -0.34 per unit of risk. If you would invest 44,476 in Invesco QQQ Trust on January 24, 2024 and sell it today you would lose (2,594) from holding Invesco QQQ Trust or give up 5.83% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Invesco QQQ Trust vs. Summit Materials
Performance |
Timeline |
Invesco QQQ Trust |
Summit Materials |
Invesco QQQ and Summit Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Invesco QQQ and Summit Materials
The main advantage of trading using opposite Invesco QQQ and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.Invesco QQQ vs. SPDR SP 500 | Invesco QQQ vs. Vanguard SP 500 | Invesco QQQ vs. NVIDIA | Invesco QQQ vs. SPDR Dow Jones |
Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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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