Correlation Between IndexIQ Active and BlackRock Intermediate
Can any of the company-specific risk be diversified away by investing in both IndexIQ Active and BlackRock Intermediate 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 BlackRock Intermediate 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 BlackRock Intermediate Muni, you can compare the effects of market volatilities on IndexIQ Active and BlackRock Intermediate 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 BlackRock Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ Active and BlackRock Intermediate.
Diversification Opportunities for IndexIQ Active and BlackRock Intermediate
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IndexIQ and BlackRock is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ Active ETF and BlackRock Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Intermediate 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 BlackRock Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Intermediate has no effect on the direction of IndexIQ Active i.e., IndexIQ Active and BlackRock Intermediate go up and down completely randomly.
Pair Corralation between IndexIQ Active and BlackRock Intermediate
Given the investment horizon of 90 days IndexIQ Active is expected to generate 1.1 times less return on investment than BlackRock Intermediate. But when comparing it to its historical volatility, IndexIQ Active ETF is 1.17 times less risky than BlackRock Intermediate. It trades about 0.13 of its potential returns per unit of risk. BlackRock Intermediate Muni is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,318 in BlackRock Intermediate Muni on September 3, 2024 and sell it today you would earn a total of 80.00 from holding BlackRock Intermediate Muni or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IndexIQ Active ETF vs. BlackRock Intermediate Muni
Performance |
| Timeline |
| IndexIQ Active ETF |
| BlackRock Intermediate |
IndexIQ Active and BlackRock Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ Active and BlackRock Intermediate
The main advantage of trading using opposite IndexIQ Active and BlackRock Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ Active position performs unexpectedly, BlackRock Intermediate 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 BlackRock Intermediate will offset losses from the drop in BlackRock Intermediate'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 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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