Correlation Between IndexIQ Active and American Century
Can any of the company-specific risk be diversified away by investing in both IndexIQ Active and American Century 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 Active and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IndexIQ Active ETF and American Century ETF, you can compare the effects of market volatilities on IndexIQ Active and American Century 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 Active with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ Active and American Century.
Diversification Opportunities for IndexIQ Active and American Century
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IndexIQ and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ Active ETF and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and IndexIQ Active 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 Active ETF are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of IndexIQ Active i.e., IndexIQ Active and American Century go up and down completely randomly.
Pair Corralation between IndexIQ Active and American Century
Given the investment horizon of 90 days IndexIQ Active ETF is expected to generate 0.79 times more return on investment than American Century. However, IndexIQ Active ETF is 1.27 times less risky than American Century. It trades about 0.07 of its potential returns per unit of risk. American Century ETF is currently generating about -0.04 per unit of risk. If you would invest 2,146 in IndexIQ Active ETF on September 19, 2024 and sell it today you would earn a total of 5.00 from holding IndexIQ Active ETF or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IndexIQ Active ETF vs. American Century ETF
Performance |
| Timeline |
| IndexIQ Active ETF |
| American Century ETF |
IndexIQ Active and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ Active and American Century
The main advantage of trading using opposite IndexIQ Active and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ Active position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| 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 |
| American Century vs. BlackRock High Yield | American Century vs. Dimensional ETF Trust | American Century vs. JP Morgan Exchange Traded | American Century 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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