Correlation Between Nasdaq QQQ and COCOS BCX

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

Diversification Opportunities for Nasdaq QQQ and COCOS BCX

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Nasdaq and COCOS is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq QQQ Invesco and COCOS BCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCOS BCX and Nasdaq 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 Nasdaq QQQ Invesco are associated (or correlated) with COCOS BCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCOS BCX has no effect on the direction of Nasdaq QQQ i.e., Nasdaq QQQ and COCOS BCX go up and down completely randomly.

Pair Corralation between Nasdaq QQQ and COCOS BCX

Considering the 90-day investment horizon Nasdaq QQQ is expected to generate 18299.14 times less return on investment than COCOS BCX. But when comparing it to its historical volatility, Nasdaq QQQ Invesco is 261.39 times less risky than COCOS BCX. It trades about 0.01 of its potential returns per unit of risk. COCOS BCX is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  0.06  in COCOS BCX on June 26, 2022 and sell it today you would earn a total of  50.94  from holding COCOS BCX or generate 80724.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy45.38%
ValuesDaily Returns

Nasdaq QQQ Invesco  vs.  COCOS BCX

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

Nasdaq Price Channel

COCOS BCX 
COCOS Performance
0 of 100
Over the last 90 days COCOS BCX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq QQQ and COCOS BCX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq QQQ and COCOS BCX

The main advantage of trading using opposite Nasdaq QQQ and COCOS BCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq QQQ position performs unexpectedly, COCOS BCX 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 COCOS BCX will offset losses from the drop in COCOS BCX's long position.
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The idea behind Nasdaq QQQ Invesco and COCOS BCX 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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