Correlation Between IndexIQ ETF and Nushares ETF
Can any of the company-specific risk be diversified away by investing in both IndexIQ ETF and Nushares 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 IndexIQ ETF and Nushares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IndexIQ ETF Trust and Nushares ETF Trust, you can compare the effects of market volatilities on IndexIQ ETF and Nushares 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 IndexIQ ETF with a short position of Nushares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ ETF and Nushares ETF.
Diversification Opportunities for IndexIQ ETF and Nushares ETF
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IndexIQ and Nushares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ ETF Trust and Nushares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nushares ETF Trust and IndexIQ ETF 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 IndexIQ ETF Trust are associated (or correlated) with Nushares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nushares ETF Trust has no effect on the direction of IndexIQ ETF i.e., IndexIQ ETF and Nushares ETF go up and down completely randomly.
Pair Corralation between IndexIQ ETF and Nushares ETF
Given the investment horizon of 90 days IndexIQ ETF Trust is expected to under-perform the Nushares ETF. In addition to that, IndexIQ ETF is 1.21 times more volatile than Nushares ETF Trust. It trades about -0.18 of its total potential returns per unit of risk. Nushares ETF Trust is currently generating about 0.26 per unit of volatility. If you would invest 2,950 in Nushares ETF Trust on August 30, 2024 and sell it today you would earn a total of 133.00 from holding Nushares ETF Trust or generate 4.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IndexIQ ETF Trust vs. Nushares ETF Trust
Performance |
| Timeline |
| IndexIQ ETF Trust |
| Nushares ETF Trust |
IndexIQ ETF and Nushares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ ETF and Nushares ETF
The main advantage of trading using opposite IndexIQ ETF and Nushares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ ETF position performs unexpectedly, Nushares 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 Nushares ETF will offset losses from the drop in Nushares ETF's long position.| IndexIQ ETF vs. Materials Select Sector | IndexIQ ETF vs. Consumer Discretionary Select | IndexIQ ETF vs. Consumer Staples Select | IndexIQ ETF vs. Health Care Select |
| Nushares ETF vs. Nuveen Growth Opportunities | Nushares ETF vs. Nuveen ESG Large Cap | Nushares ETF vs. Invesco ESG NASDAQ | Nushares ETF vs. Nuveen ESG Mid Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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