Correlation Between IndexIQ and IndexIQ
Can any of the company-specific risk be diversified away by investing in both IndexIQ and IndexIQ 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 and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IndexIQ and IndexIQ, you can compare the effects of market volatilities on IndexIQ and IndexIQ 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 with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ and IndexIQ.
Diversification Opportunities for IndexIQ and IndexIQ
Weak diversification
The 3 months correlation between IndexIQ and IndexIQ is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IndexIQ 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 are associated (or correlated) with IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of IndexIQ i.e., IndexIQ and IndexIQ go up and down completely randomly.
Pair Corralation between IndexIQ and IndexIQ
Considering the 90-day investment horizon IndexIQ is expected to generate 0.39 times more return on investment than IndexIQ. However, IndexIQ is 2.58 times less risky than IndexIQ. It trades about 0.07 of its potential returns per unit of risk. IndexIQ is currently generating about 0.02 per unit of risk. If you would invest 2,470 in IndexIQ on September 3, 2024 and sell it today you would earn a total of 106.00 from holding IndexIQ or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.35% |
| Values | Daily Returns |
IndexIQ vs. IndexIQ
Performance |
| Timeline |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IndexIQ and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ and IndexIQ
The main advantage of trading using opposite IndexIQ and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ position performs unexpectedly, IndexIQ 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 will offset losses from the drop in IndexIQ's long position.| IndexIQ vs. IQ Hedge Multi Strategy | IndexIQ vs. IQ Merger Arbitrage | IndexIQ vs. WisdomTree Emerging Currency | IndexIQ vs. ProShares Large Cap |
| IndexIQ vs. VanEck Natural Resources | IndexIQ vs. IQ Merger Arbitrage | IndexIQ vs. SPDR SP Global | IndexIQ vs. IQ Hedge Multi Strategy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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