Correlation Between SPDR SP and IndexIQ
Can any of the company-specific risk be diversified away by investing in both SPDR SP and IndexIQ 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 SPDR SP and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Metals and IndexIQ, you can compare the effects of market volatilities on SPDR SP and IndexIQ 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 SPDR SP with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and IndexIQ.
Diversification Opportunities for SPDR SP and IndexIQ
Very good diversification
The 3 months correlation between SPDR and IndexIQ is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Metals and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and SPDR SP 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 SPDR SP Metals are associated (or correlated) with IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of SPDR SP i.e., SPDR SP and IndexIQ go up and down completely randomly.
Pair Corralation between SPDR SP and IndexIQ
Considering the 90-day investment horizon SPDR SP Metals is expected to generate 1.59 times more return on investment than IndexIQ. However, SPDR SP is 1.59 times more volatile than IndexIQ. It trades about 0.04 of its potential returns per unit of risk. IndexIQ is currently generating about -0.01 per unit of risk. If you would invest 5,456 in SPDR SP Metals on September 3, 2024 and sell it today you would earn a total of 1,419 from holding SPDR SP Metals or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 27.79% |
| Values | Daily Returns |
SPDR SP Metals vs. IndexIQ
Performance |
| Timeline |
| SPDR SP Metals |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SPDR SP and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and IndexIQ
The main advantage of trading using opposite SPDR SP and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, IndexIQ 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 will offset losses from the drop in IndexIQ's long position.| SPDR SP vs. Materials Select Sector | SPDR SP vs. SPDR SP Oil | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
| IndexIQ vs. VanEck Natural Resources | IndexIQ vs. IQ Merger Arbitrage | IndexIQ vs. SPDR SP Global | IndexIQ vs. IQ Hedge Multi Strategy |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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