Correlation Between Teradyne and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Teradyne and Invesco QQQ 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 Teradyne and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Invesco QQQ Trust, you can compare the effects of market volatilities on Teradyne and Invesco QQQ 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 Teradyne with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Invesco QQQ.
Diversification Opportunities for Teradyne and Invesco QQQ
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Teradyne and Invesco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Invesco QQQ Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco QQQ Trust and Teradyne 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 Teradyne are associated (or correlated) with Invesco QQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco QQQ Trust has no effect on the direction of Teradyne i.e., Teradyne and Invesco QQQ go up and down completely randomly.
Pair Corralation between Teradyne and Invesco QQQ
Considering the 90-day investment horizon Teradyne is expected to generate 2.43 times more return on investment than Invesco QQQ. However, Teradyne is 2.43 times more volatile than Invesco QQQ Trust. It trades about 0.13 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.14 per unit of risk. If you would invest 8,618 in Teradyne on February 6, 2024 and sell it today you would earn a total of 3,443 from holding Teradyne or generate 39.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Invesco QQQ Trust
Performance |
| Timeline |
| Teradyne |
| Invesco QQQ Trust |
Teradyne and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Invesco QQQ
The main advantage of trading using opposite Teradyne and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Invesco QQQ 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 Invesco QQQ will offset losses from the drop in Invesco QQQ's long position.The idea behind Teradyne and Invesco QQQ Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Invesco QQQ vs. Invesco SP 500 | Invesco QQQ vs. Invesco SP MidCap | Invesco QQQ vs. Invesco SP SmallCap | Invesco QQQ vs. Invesco SP MidCap |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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