Correlation Between Formidable ETF and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both Formidable 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 Formidable 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 Formidable ETF and IndexIQ Active ETF, you can compare the effects of market volatilities on Formidable 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 Formidable ETF with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formidable ETF and IndexIQ Active.
Diversification Opportunities for Formidable ETF and IndexIQ Active
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Formidable and IndexIQ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF 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 Formidable 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 Formidable ETF 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 Formidable ETF i.e., Formidable ETF and IndexIQ Active go up and down completely randomly.
Pair Corralation between Formidable ETF and IndexIQ Active
Given the investment horizon of 90 days Formidable ETF is expected to generate 9.21 times less return on investment than IndexIQ Active. In addition to that, Formidable ETF is 3.35 times more volatile than IndexIQ Active ETF. It trades about 0.0 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.14 per unit of volatility. If you would invest 2,027 in IndexIQ Active ETF on September 1, 2024 and sell it today you would earn a total of 101.00 from holding IndexIQ Active ETF or generate 4.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Formidable ETF vs. IndexIQ Active ETF
Performance |
| Timeline |
| Formidable ETF |
| IndexIQ Active ETF |
Formidable ETF and IndexIQ Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formidable ETF and IndexIQ Active
The main advantage of trading using opposite Formidable ETF and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formidable 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.| Formidable ETF vs. Franklin Liberty Systematic | Formidable ETF vs. Alger Mid Cap | Formidable ETF vs. Tidal ETF Trust | Formidable ETF vs. First Trust Managed |
| IndexIQ Active vs. SPDR Bloomberg Barclays | IndexIQ Active vs. FlexShares STOXX Global | IndexIQ Active vs. BNY Mellon ETF | IndexIQ Active vs. American Century Sustainable |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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