Correlation Between MicroSectors FANG and IndexIQ
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG 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 MicroSectors FANG and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and IndexIQ, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IndexIQ.
Diversification Opportunities for MicroSectors FANG and IndexIQ
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MicroSectors and IndexIQ is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and IndexIQ go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IndexIQ
If you would invest 42,800 in MicroSectors FANG Index on September 19, 2024 and sell it today you would earn a total of 23,395 from holding MicroSectors FANG Index or generate 54.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 0.79% |
Values | Daily Returns |
MicroSectors FANG Index vs. IndexIQ
Performance |
Timeline |
MicroSectors FANG Index |
IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MicroSectors FANG and IndexIQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MicroSectors FANG and IndexIQ
The main advantage of trading using opposite MicroSectors FANG and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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.MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
IndexIQ vs. IQ Hedge Multi Strategy | IndexIQ vs. IQ Merger Arbitrage | IndexIQ vs. WisdomTree Emerging Currency | IndexIQ vs. ProShares Large Cap |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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