Correlation Between Howard Hughes and IndexIQ

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

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

Diversification Opportunities for Howard Hughes and IndexIQ

0.45

Correlation Coefficient

Howard Hughes  IndexIQ

Very weak diversification

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

Pair Corralation between Howard Hughes and IndexIQ

Considering the 90-day investment horizon Howard Hughes is expected to generate 2.42 times more return on investment than IndexIQ. However, Howard Hughes is 2.42 times more volatile than IndexIQ. It trades about 0.01 of its potential returns per unit of risk. IndexIQ is currently generating about -0.22 per unit of risk. If you would invest  7,622  in Howard Hughes on October 24, 2024 and sell it today you would earn a total of  43.00  from holding Howard Hughes or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.59%
Values	Daily Returns

Howard Hughes  vs.  IndexIQ

Howard Hughes

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Howard Hughes are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Howard Hughes is not utilizing all of its potentials. The latest 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. Despite latest weak performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Howard Hughes and IndexIQ

The main advantage of trading using opposite Howard Hughes and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Howard Hughes 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 Howard Hughes 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.