Correlation Between US Commodity and IndexIQ ETF
Can any of the company-specific risk be diversified away by investing in both US Commodity and IndexIQ ETF 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 US Commodity and IndexIQ ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Commodity Funds and IndexIQ ETF Trust, you can compare the effects of market volatilities on US Commodity and IndexIQ ETF 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 US Commodity with a short position of IndexIQ ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Commodity and IndexIQ ETF.
Diversification Opportunities for US Commodity and IndexIQ ETF
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ALUM and IndexIQ is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding US Commodity Funds and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust and US Commodity 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 US Commodity Funds are associated (or correlated) with IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of US Commodity i.e., US Commodity and IndexIQ ETF go up and down completely randomly.
Pair Corralation between US Commodity and IndexIQ ETF
Given the investment horizon of 90 days US Commodity Funds is expected to generate 1.82 times more return on investment than IndexIQ ETF. However, US Commodity is 1.82 times more volatile than IndexIQ ETF Trust. It trades about 0.03 of its potential returns per unit of risk. IndexIQ ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 3,002 in US Commodity Funds on September 3, 2024 and sell it today you would earn a total of 319.00 from holding US Commodity Funds or generate 10.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 45.86% |
| Values | Daily Returns |
US Commodity Funds vs. IndexIQ ETF Trust
Performance |
| Timeline |
| US Commodity Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| IndexIQ ETF Trust |
US Commodity and IndexIQ ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Commodity and IndexIQ ETF
The main advantage of trading using opposite US Commodity and IndexIQ ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Commodity position performs unexpectedly, IndexIQ ETF 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 IndexIQ ETF will offset losses from the drop in IndexIQ ETF's long position.| US Commodity vs. FT Vest Equity | US Commodity vs. Zillow Group Class | US Commodity vs. Northern Lights | US Commodity vs. VanEck Vectors Moodys |
| IndexIQ ETF vs. IndexIQ ETF Trust | IndexIQ ETF vs. Invesco ESG NASDAQ | IndexIQ ETF vs. Invesco ESG NASDAQ | IndexIQ ETF vs. Nushares ETF Trust |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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