Correlation Between IndexIQ ETF and Consumer Staples
Can any of the company-specific risk be diversified away by investing in both IndexIQ ETF and Consumer Staples 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 Consumer Staples 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 Consumer Staples Select, you can compare the effects of market volatilities on IndexIQ ETF and Consumer Staples 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 Consumer Staples. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ ETF and Consumer Staples.
Diversification Opportunities for IndexIQ ETF and Consumer Staples
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between IndexIQ and Consumer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ ETF Trust and Consumer Staples Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Staples Select 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 Consumer Staples. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Staples Select has no effect on the direction of IndexIQ ETF i.e., IndexIQ ETF and Consumer Staples go up and down completely randomly.
Pair Corralation between IndexIQ ETF and Consumer Staples
Given the investment horizon of 90 days IndexIQ ETF is expected to generate 18.3 times less return on investment than Consumer Staples. In addition to that, IndexIQ ETF is 1.41 times more volatile than Consumer Staples Select. It trades about 0.01 of its total potential returns per unit of risk. Consumer Staples Select is currently generating about 0.28 per unit of volatility. If you would invest 8,012 in Consumer Staples Select on September 1, 2024 and sell it today you would earn a total of 310.00 from holding Consumer Staples Select or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
IndexIQ ETF Trust vs. Consumer Staples Select
Performance |
| Timeline |
| IndexIQ ETF Trust |
| Consumer Staples Select |
IndexIQ ETF and Consumer Staples Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ ETF and Consumer Staples
The main advantage of trading using opposite IndexIQ ETF and Consumer Staples positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ ETF position performs unexpectedly, Consumer Staples 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 Consumer Staples will offset losses from the drop in Consumer Staples' long position.| IndexIQ ETF vs. IndexIQ ETF Trust | IndexIQ ETF vs. ProShares SP Kensho | IndexIQ ETF vs. Invesco Alerian Galaxy |
| Consumer Staples vs. Consumer Discretionary Select | Consumer Staples vs. Industrial Select Sector | Consumer Staples vs. Utilities Select Sector | Consumer Staples vs. Materials Select Sector |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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