Correlation Between IShares Trust and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both IShares Trust 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 IShares Trust and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and IndexIQ Active ETF, you can compare the effects of market volatilities on IShares Trust 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 IShares Trust with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IndexIQ Active.
Diversification Opportunities for IShares Trust and IndexIQ Active
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IndexIQ is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and IndexIQ Active go up and down completely randomly.
Pair Corralation between IShares Trust and IndexIQ Active
Given the investment horizon of 90 days IShares Trust is expected to generate 2.12 times less return on investment than IndexIQ Active. But when comparing it to its historical volatility, iShares Trust is 1.12 times less risky than IndexIQ Active. It trades about 0.06 of its potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,571 in IndexIQ Active ETF on December 2, 2024 and sell it today you would earn a total of 54.00 from holding IndexIQ Active ETF or generate 2.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Trust vs. IndexIQ Active ETF
Performance |
Timeline |
iShares Trust |
IndexIQ Active ETF |
IShares Trust and IndexIQ Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Trust and IndexIQ Active
The main advantage of trading using opposite IShares Trust and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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.IShares Trust vs. iShares ESG Aggregate | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG Advanced | IShares Trust vs. iShares ESG USD |
IndexIQ Active vs. VanEck Vectors Moodys | IndexIQ Active vs. Valued Advisers Trust | IndexIQ Active vs. Xtrackers California Municipal | IndexIQ Active vs. Principal Exchange Traded Funds |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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