Correlation Between IndexIQ and FFSG

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

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

Diversification Opportunities for IndexIQ and FFSG

0.92

Correlation Coefficient

IndexIQ  FFSG

Almost no diversification

The 3 months correlation between IndexIQ and FFSG is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and FFSG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFSG 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 FFSG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFSG has no effect on the direction of IndexIQ i.e., IndexIQ and FFSG go up and down completely randomly.

Pair Corralation between IndexIQ and FFSG

If you would invest  3,321  in FFSG on September 13, 2024 and sell it today you would earn a total of  0.00  from holding FFSG or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

IndexIQ  vs.  FFSG

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. Despite quite persistent primary indicators, IndexIQ is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FFSG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FFSG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FFSG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IndexIQ and FFSG

The main advantage of trading using opposite IndexIQ and FFSG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ position performs unexpectedly, FFSG 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 FFSG will offset losses from the drop in FFSG's long position.

The idea behind IndexIQ and FFSG 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.