Correlation Between IQ Hedge and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both IQ Hedge and WisdomTree Emerging 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 IQ Hedge and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ Hedge Multi Strategy and WisdomTree Emerging Currency, you can compare the effects of market volatilities on IQ Hedge and WisdomTree Emerging 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 IQ Hedge with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Hedge and WisdomTree Emerging.
Diversification Opportunities for IQ Hedge and WisdomTree Emerging
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between QAI and WisdomTree is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi Strategy and WisdomTree Emerging Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and IQ Hedge 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 IQ Hedge Multi Strategy are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of IQ Hedge i.e., IQ Hedge and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between IQ Hedge and WisdomTree Emerging
Considering the 90-day investment horizon IQ Hedge Multi Strategy is expected to generate 0.85 times more return on investment than WisdomTree Emerging. However, IQ Hedge Multi Strategy is 1.17 times less risky than WisdomTree Emerging. It trades about 0.13 of its potential returns per unit of risk. WisdomTree Emerging Currency is currently generating about 0.06 per unit of risk. If you would invest 2,890 in IQ Hedge Multi Strategy on September 4, 2024 and sell it today you would earn a total of 374.00 from holding IQ Hedge Multi Strategy or generate 12.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.31% |
| Values | Daily Returns |
IQ Hedge Multi Strategy vs. WisdomTree Emerging Currency
Performance |
| Timeline |
| IQ Hedge Multi |
| WisdomTree Emerging |
IQ Hedge and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Hedge and WisdomTree Emerging
The main advantage of trading using opposite IQ Hedge and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Hedge position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.| IQ Hedge vs. IQ Merger Arbitrage | IQ Hedge vs. ProShares Hedge Replication | IQ Hedge vs. First Trust LongShort |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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