Correlation Between IndexIQ and VanEck Natural
Can any of the company-specific risk be diversified away by investing in both IndexIQ and VanEck Natural 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 VanEck Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IndexIQ and VanEck Natural Resources, you can compare the effects of market volatilities on IndexIQ and VanEck Natural 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 VanEck Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ and VanEck Natural.
Diversification Opportunities for IndexIQ and VanEck Natural
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IndexIQ and VanEck is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and VanEck Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Natural Resources 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 VanEck Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Natural Resources has no effect on the direction of IndexIQ i.e., IndexIQ and VanEck Natural go up and down completely randomly.
Pair Corralation between IndexIQ and VanEck Natural
Considering the 90-day investment horizon IndexIQ is expected to generate 0.41 times more return on investment than VanEck Natural. However, IndexIQ is 2.45 times less risky than VanEck Natural. It trades about 0.08 of its potential returns per unit of risk. VanEck Natural Resources is currently generating about 0.01 per unit of risk. If you would invest 2,474 in IndexIQ on September 3, 2024 and sell it today you would earn a total of 102.00 from holding IndexIQ or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.0% |
| Values | Daily Returns |
IndexIQ vs. VanEck Natural Resources
Performance |
| Timeline |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| VanEck Natural Resources |
IndexIQ and VanEck Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ and VanEck Natural
The main advantage of trading using opposite IndexIQ and VanEck Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ position performs unexpectedly, VanEck Natural 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 VanEck Natural will offset losses from the drop in VanEck Natural's long position.| IndexIQ vs. IQ Hedge Multi Strategy | IndexIQ vs. IQ Merger Arbitrage | IndexIQ vs. WisdomTree Emerging Currency | IndexIQ vs. ProShares Large Cap |
| VanEck Natural vs. Invesco MSCI Global | VanEck Natural vs. WisdomTree Continuous Commodity | VanEck Natural vs. VanEck UraniumNuclear Energy | VanEck Natural vs. SPDR SP Global |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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