Correlation Between Amazon and IndexIQ Active

Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and IndexIQ Active ETF, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and IndexIQ Active.

Diversification Opportunities for Amazon and IndexIQ Active

-0.35

Correlation Coefficient

Amazon  IndexIQ Active

Very good diversification

The 3 months correlation between Amazon and IndexIQ is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and IndexIQ Active go up and down completely randomly.

Pair Corralation between Amazon and IndexIQ Active

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the IndexIQ Active. In addition to that, Amazon is 2.32 times more volatile than IndexIQ Active ETF. It trades about -0.09 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.07 per unit of volatility. If you would invest  2,573  in IndexIQ Active ETF on December 26, 2024 and sell it today you would earn a total of  72.00  from holding IndexIQ Active ETF or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  IndexIQ Active ETF

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

IndexIQ Active ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IndexIQ Active ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IndexIQ Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and IndexIQ Active

The main advantage of trading using opposite Amazon and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.

The idea behind Amazon Inc and IndexIQ Active ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.