Correlation Between Invesco QQQ and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Invesco QQQ and ProShares Short 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 Short 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 Short VIX, you can compare the effects of market volatilities on Invesco QQQ and ProShares Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco QQQ and ProShares Short.
Diversification Opportunities for Invesco QQQ and ProShares Short
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and ProShares is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco QQQ Trust and ProShares Short VIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short VIX 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short VIX has no effect on the direction of Invesco QQQ i.e., Invesco QQQ and ProShares Short go up and down completely randomly.
Pair Corralation between Invesco QQQ and ProShares Short
Considering the 90-day investment horizon Invesco QQQ Trust is expected to under-perform the ProShares Short. But the etf apears to be less risky and, when comparing its historical volatility, Invesco QQQ Trust is 1.71 times less risky than ProShares Short. The etf trades about -0.2 of its potential returns per unit of risk. The ProShares Short VIX is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 5,623 in ProShares Short VIX on January 25, 2024 and sell it today you would lose (172.00) from holding ProShares Short VIX or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco QQQ Trust vs. ProShares Short VIX
Performance |
| Timeline |
| Invesco QQQ Trust |
| ProShares Short VIX |
Invesco QQQ and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco QQQ and ProShares Short
The main advantage of trading using opposite Invesco QQQ and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco QQQ position performs unexpectedly, ProShares Short 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 Short will offset losses from the drop in ProShares Short'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 Short vs. ProShares UltraShort FTSE | ProShares Short vs. ProShares UltraShort Gold | ProShares Short vs. ProShares UltraShort Silver |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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