Correlation Between Dimensional ETF and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and IndexIQ Active 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 Dimensional ETF and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and IndexIQ Active ETF, you can compare the effects of market volatilities on Dimensional ETF and IndexIQ Active 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 Dimensional ETF with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and IndexIQ Active.
Diversification Opportunities for Dimensional ETF and IndexIQ Active
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and IndexIQ is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF and Dimensional 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 Dimensional ETF Trust are associated (or correlated) with IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and IndexIQ Active go up and down completely randomly.
Pair Corralation between Dimensional ETF and IndexIQ Active
Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.47 times less return on investment than IndexIQ Active. But when comparing it to its historical volatility, Dimensional ETF Trust is 1.54 times less risky than IndexIQ Active. It trades about 0.2 of its potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,140 in IndexIQ Active ETF on August 30, 2024 and sell it today you would earn a total of 26.00 from holding IndexIQ Active ETF or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dimensional ETF Trust vs. IndexIQ Active ETF
Performance |
| Timeline |
| Dimensional ETF Trust |
| IndexIQ Active ETF |
Dimensional ETF and IndexIQ Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and IndexIQ Active
The main advantage of trading using opposite Dimensional ETF and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, IndexIQ Active 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 Active will offset losses from the drop in IndexIQ Active's long position.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Emerging Core |
| IndexIQ Active vs. BlackRock High Yield | IndexIQ Active vs. Dimensional ETF Trust | IndexIQ Active vs. JP Morgan Exchange Traded | IndexIQ Active vs. Janus Detroit Street |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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