Correlation Between IQ Hedge and SPDR SP
Can any of the company-specific risk be diversified away by investing in both IQ Hedge and SPDR SP 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 SP 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 SP Global, you can compare the effects of market volatilities on IQ Hedge and SPDR SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Hedge and SPDR SP.
Diversification Opportunities for IQ Hedge and SPDR SP
Very poor diversification
The 3 months correlation between QAI and SPDR is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi Strategy and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of IQ Hedge i.e., IQ Hedge and SPDR SP go up and down completely randomly.
Pair Corralation between IQ Hedge and SPDR SP
Considering the 90-day investment horizon IQ Hedge Multi Strategy is expected to generate 0.32 times more return on investment than SPDR SP. However, IQ Hedge Multi Strategy is 3.17 times less risky than SPDR SP. It trades about -0.15 of its potential returns per unit of risk. SPDR SP Global is currently generating about -0.05 per unit of risk. If you would invest 3,201 in IQ Hedge Multi Strategy on December 1, 2024 and sell it today you would lose (28.00) from holding IQ Hedge Multi Strategy or give up 0.87% of portfolio value 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 SP Global
Performance |
| Timeline |
| IQ Hedge Multi |
| SPDR SP Global |
IQ Hedge and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IQ Hedge and SPDR SP
The main advantage of trading using opposite IQ Hedge and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Hedge position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| IQ Hedge vs. IQ Merger Arbitrage | IQ Hedge vs. ProShares Hedge Replication | IQ Hedge vs. First Trust LongShort |
| SPDR SP vs. FlexShares Morningstar Global | SPDR SP vs. SPDR SP North | SPDR SP vs. abrdn Physical Precious | SPDR SP vs. SPDR SP Global |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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