Correlation Between IQ Hedge and SPDR SSgA
Can any of the company-specific risk be diversified away by investing in both IQ Hedge and SPDR SSgA 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 SPDR SSgA 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 SPDR SSgA Global, you can compare the effects of market volatilities on IQ Hedge and SPDR SSgA 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 SPDR SSgA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Hedge and SPDR SSgA.
Diversification Opportunities for IQ Hedge and SPDR SSgA
Very poor diversification
The 3 months correlation between QAI and SPDR is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi Strategy and SPDR SSgA Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSgA Global 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 SPDR SSgA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSgA Global has no effect on the direction of IQ Hedge i.e., IQ Hedge and SPDR SSgA go up and down completely randomly.
Pair Corralation between IQ Hedge and SPDR SSgA
Considering the 90-day investment horizon IQ Hedge Multi Strategy is expected to generate 0.67 times more return on investment than SPDR SSgA. However, IQ Hedge Multi Strategy is 1.49 times less risky than SPDR SSgA. It trades about 0.26 of its potential returns per unit of risk. SPDR SSgA Global is currently generating about 0.12 per unit of risk. If you would invest 3,207 in IQ Hedge Multi Strategy on August 31, 2024 and sell it today you would earn a total of 50.00 from holding IQ Hedge Multi Strategy or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ Hedge Multi Strategy vs. SPDR SSgA Global
Performance |
| Timeline |
| IQ Hedge Multi |
| SPDR SSgA Global |
IQ Hedge and SPDR SSgA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Hedge and SPDR SSgA
The main advantage of trading using opposite IQ Hedge and SPDR SSgA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Hedge position performs unexpectedly, SPDR SSgA 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 SPDR SSgA will offset losses from the drop in SPDR SSgA's long position.| IQ Hedge vs. Franklin Liberty Systematic | IQ Hedge vs. Tidal ETF Trust | IQ Hedge vs. Eaton Vance Enhanced | IQ Hedge vs. Grayscale Ethereum Mini |
| SPDR SSgA vs. SPDR SSgA Income | SPDR SSgA vs. SPDR SSgA Multi Asset | SPDR SSgA vs. SPDR Bloomberg International | SPDR SSgA vs. SPDR Bloomberg Emerging |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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