Correlation Between Boeing and IndexIQ

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

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

Diversification Opportunities for Boeing and IndexIQ

-0.83

Correlation Coefficient

Boeing  IndexIQ

Pay attention - limited upside

The 3 months correlation between Boeing and IndexIQ is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Boeing 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 The Boeing 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 Boeing i.e., Boeing and IndexIQ go up and down completely randomly.

Pair Corralation between Boeing and IndexIQ

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the IndexIQ. In addition to that, Boeing is 2.38 times more volatile than IndexIQ. It trades about -0.01 of its total potential returns per unit of risk. IndexIQ is currently generating about 0.04 per unit of volatility. If you would invest  2,814  in IndexIQ on October 10, 2024 and sell it today you would earn a total of  446.00  from holding IndexIQ or generate 15.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	93.94%
Values	Daily Returns

The Boeing  vs.  IndexIQ

Boeing

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Boeing and IndexIQ

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

The idea behind The Boeing and IndexIQ 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.