Correlation Between Aspen Technology and Invesco QQQ

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Can any of the company-specific risk be diversified away by investing in both Aspen Technology 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 Aspen Technology and Invesco QQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Technology and Invesco QQQ Trust, you can compare the effects of market volatilities on Aspen Technology 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 Aspen Technology with a short position of Invesco QQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Technology and Invesco QQQ.

Diversification Opportunities for Aspen Technology and Invesco QQQ

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aspen and Invesco is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology 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 Aspen Technology 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 Aspen Technology 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 Aspen Technology i.e., Aspen Technology and Invesco QQQ go up and down completely randomly.

Pair Corralation between Aspen Technology and Invesco QQQ

Given the investment horizon of 90 days Aspen Technology is expected to generate 1.41 times more return on investment than Invesco QQQ. However, Aspen Technology is 1.41 times more volatile than Invesco QQQ Trust. It trades about 0.06 of its potential returns per unit of risk. Invesco QQQ Trust is currently generating about 0.0 per unit of risk. If you would invest  14,140  in Aspen Technology on September 6, 2022 and sell it today you would earn a total of  9,859  from holding Aspen Technology or generate 69.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aspen Technology  vs.  Invesco QQQ Trust

 Performance (%) 
       Timeline  
Aspen Technology 
Aspen Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Aspen Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aspen Price Channel

Invesco QQQ Trust 
Invesco Performance
0 of 100
Over the last 90 days Invesco QQQ Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco QQQ is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Invesco Price Channel

Aspen Technology and Invesco QQQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and Invesco QQQ

The main advantage of trading using opposite Aspen Technology and Invesco QQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology 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.
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The idea behind Aspen Technology 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.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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