Correlation Between IQ 50 and IndexIQ

Can any of the company-specific risk be diversified away by investing in both IQ 50 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 IQ 50 and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IQ 50 Percent and IndexIQ, you can compare the effects of market volatilities on IQ 50 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 IQ 50 with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ 50 and IndexIQ.

Diversification Opportunities for IQ 50 and IndexIQ

-0.45

Correlation Coefficient

IQ 50  IndexIQ

Very good diversification

The 3 months correlation between HFXI and IndexIQ is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding IQ 50 Percent and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IQ 50 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 IQ 50 Percent 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 IQ 50 i.e., IQ 50 and IndexIQ go up and down completely randomly.

Pair Corralation between IQ 50 and IndexIQ

If you would invest  2,602  in IQ 50 Percent on October 24, 2024 and sell it today you would earn a total of  92.00  from holding IQ 50 Percent or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

IQ 50 Percent  vs.  IndexIQ

IQ 50 Percent

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ 50 Percent are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IQ 50 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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 IQ 50 and IndexIQ

The main advantage of trading using opposite IQ 50 and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ 50 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 IQ 50 Percent 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.