Correlation Between Microsoft and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and IndexIQ, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and IndexIQ.
Diversification Opportunities for Microsoft and IndexIQ
Good diversification
The 3 months correlation between Microsoft and IndexIQ is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and IndexIQ go up and down completely randomly.
Pair Corralation between Microsoft and IndexIQ
If you would invest 3,376 in IndexIQ on August 24, 2024 and sell it today you would earn a total of 0.00 from holding IndexIQ or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Microsoft vs. IndexIQ
Performance |
| Timeline |
| Microsoft |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and IndexIQ
The main advantage of trading using opposite Microsoft and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| IndexIQ vs. VictoryShares Discovery Enhanced | IndexIQ vs. First Trust Mid | IndexIQ vs. First Trust Small |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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