Correlation Between Technology Select and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both Technology Select and IndexIQ 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 Technology Select and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and IndexIQ Active ETF, you can compare the effects of market volatilities on Technology Select and IndexIQ 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 Technology Select with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and IndexIQ Active.
Diversification Opportunities for Technology Select and IndexIQ Active
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Technology and IndexIQ is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF and Technology Select 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 Technology Select Sector are associated (or correlated) with IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of Technology Select i.e., Technology Select and IndexIQ Active go up and down completely randomly.
Pair Corralation between Technology Select and IndexIQ Active
Considering the 90-day investment horizon Technology Select Sector is expected to generate 7.4 times more return on investment than IndexIQ Active. However, Technology Select is 7.4 times more volatile than IndexIQ Active ETF. It trades about 0.08 of its potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.1 per unit of risk. If you would invest 18,353 in Technology Select Sector on August 25, 2024 and sell it today you would earn a total of 5,007 from holding Technology Select Sector or generate 27.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology Select Sector vs. IndexIQ Active ETF
Performance |
| Timeline |
| Technology Select Sector |
| IndexIQ Active ETF |
Technology Select and IndexIQ Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and IndexIQ Active
The main advantage of trading using opposite Technology Select and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, IndexIQ 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 IndexIQ Active will offset losses from the drop in IndexIQ Active's long position.| Technology Select vs. First Trust Exchange Traded | Technology Select vs. Ultimus Managers Trust | Technology Select vs. Horizon Kinetics Medical | Technology Select vs. Harbor Health Care |
| IndexIQ Active vs. Grayscale Bitcoin Mini | IndexIQ Active vs. WisdomTree Floating Rate | IndexIQ Active vs. Tidal Trust II | IndexIQ Active vs. Technology Select Sector |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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