Correlation Between VictoryShares THB and IndexIQ ETF
Can any of the company-specific risk be diversified away by investing in both VictoryShares THB and IndexIQ ETF 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 VictoryShares THB and IndexIQ ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VictoryShares THB Mid and IndexIQ ETF Trust, you can compare the effects of market volatilities on VictoryShares THB and IndexIQ ETF 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 VictoryShares THB with a short position of IndexIQ ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares THB and IndexIQ ETF.
Diversification Opportunities for VictoryShares THB and IndexIQ ETF
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VictoryShares and IndexIQ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust and VictoryShares THB 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 VictoryShares THB Mid are associated (or correlated) with IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and IndexIQ ETF go up and down completely randomly.
Pair Corralation between VictoryShares THB and IndexIQ ETF
Given the investment horizon of 90 days VictoryShares THB Mid is expected to generate 1.09 times more return on investment than IndexIQ ETF. However, VictoryShares THB is 1.09 times more volatile than IndexIQ ETF Trust. It trades about 0.11 of its potential returns per unit of risk. IndexIQ ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 2,965 in VictoryShares THB Mid on August 30, 2024 and sell it today you would earn a total of 117.00 from holding VictoryShares THB Mid or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.7% |
| Values | Daily Returns |
VictoryShares THB Mid vs. IndexIQ ETF Trust
Performance |
| Timeline |
| VictoryShares THB Mid |
| IndexIQ ETF Trust |
VictoryShares THB and IndexIQ ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VictoryShares THB and IndexIQ ETF
The main advantage of trading using opposite VictoryShares THB and IndexIQ ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares THB position performs unexpectedly, IndexIQ ETF 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 ETF will offset losses from the drop in IndexIQ ETF's long position.| VictoryShares THB vs. Freedom Day Dividend | VictoryShares THB vs. Franklin Templeton ETF | VictoryShares THB vs. iShares MSCI China | VictoryShares THB vs. Tidal Trust II |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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