Correlation Between Cardano and Invesco QQQ
Can any of the company-specific risk be diversified away by investing in both Cardano 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 Cardano and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Invesco QQQ Trust, you can compare the effects of market volatilities on Cardano 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 Cardano with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Invesco QQQ.
Diversification Opportunities for Cardano and Invesco QQQ
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardano and Invesco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cardano 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 Cardano 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 Cardano 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 Cardano i.e., Cardano and Invesco QQQ go up and down completely randomly.
Pair Corralation between Cardano and Invesco QQQ
Assuming the 90 days trading horizon Cardano is expected to generate 5.06 times more return on investment than Invesco QQQ. However, Cardano is 5.06 times more volatile than Invesco QQQ Trust. It trades about 0.11 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.18 per unit of risk. If you would invest 29.00 in Cardano on January 25, 2024 and sell it today you would earn a total of 21.00 from holding Cardano or generate 72.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.09% |
| Values | Daily Returns |
Cardano vs. Invesco QQQ Trust
Performance |
| Timeline |
| Cardano |
| Invesco QQQ Trust |
Cardano and Invesco QQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Invesco QQQ
The main advantage of trading using opposite Cardano and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano 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 Cardano 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. iShares Small Cap | Invesco QQQ vs. Pacer Cash Cows | Invesco QQQ vs. GXO Logistics | Invesco QQQ 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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