Correlation Between IShares Fallen and IndexIQ
Can any of the company-specific risk be diversified away by investing in both IShares Fallen 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 IShares Fallen and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Fallen Angels and IndexIQ, you can compare the effects of market volatilities on IShares Fallen 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 IShares Fallen with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fallen and IndexIQ.
Diversification Opportunities for IShares Fallen and IndexIQ
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IndexIQ is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fallen Angels and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IShares Fallen 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 iShares Fallen Angels 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 IShares Fallen i.e., IShares Fallen and IndexIQ go up and down completely randomly.
Pair Corralation between IShares Fallen and IndexIQ
If you would invest 2,566 in iShares Fallen Angels on September 3, 2024 and sell it today you would earn a total of 166.00 from holding iShares Fallen Angels or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
iShares Fallen Angels vs. IndexIQ
Performance |
| Timeline |
| iShares Fallen Angels |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares Fallen and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Fallen and IndexIQ
The main advantage of trading using opposite IShares Fallen and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fallen 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.| IShares Fallen vs. iShares iBoxx Investment | IShares Fallen vs. SPDR Bloomberg High | IShares Fallen vs. iShares TIPS Bond | IShares Fallen vs. iShares 20 Year |
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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