Correlation Between IndexIQ and Invesco Active
Can any of the company-specific risk be diversified away by investing in both IndexIQ and Invesco Active 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 and Invesco Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IndexIQ and Invesco Active Real, you can compare the effects of market volatilities on IndexIQ and Invesco Active 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 with a short position of Invesco Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IndexIQ and Invesco Active.
Diversification Opportunities for IndexIQ and Invesco Active
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IndexIQ and Invesco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real and IndexIQ 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 are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of IndexIQ i.e., IndexIQ and Invesco Active go up and down completely randomly.
Pair Corralation between IndexIQ and Invesco Active
Given the investment horizon of 90 days IndexIQ is expected to under-perform the Invesco Active. But the etf apears to be less risky and, when comparing its historical volatility, IndexIQ is 1.26 times less risky than Invesco Active. The etf trades about -0.05 of its potential returns per unit of risk. The Invesco Active Real is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9,474 in Invesco Active Real on November 2, 2024 and sell it today you would lose (382.00) from holding Invesco Active Real or give up 4.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 56.31% |
| Values | Daily Returns |
IndexIQ vs. Invesco Active Real
Performance |
| Timeline |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Invesco Active Real |
IndexIQ and Invesco Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IndexIQ and Invesco Active
The main advantage of trading using opposite IndexIQ and Invesco Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ position performs unexpectedly, Invesco Active 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 Invesco Active will offset losses from the drop in Invesco Active's long position.| IndexIQ vs. Invesco Active Real | IndexIQ vs. First Trust SP | IndexIQ vs. Invesco KBW Premium | IndexIQ vs. VanEck Mortgage REIT |
| Invesco Active vs. First Trust SP | Invesco Active vs. iShares Residential and | Invesco Active vs. Nuveen Short Term REIT |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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