Correlation Between IShares Cohen and IndexIQ

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Can any of the company-specific risk be diversified away by investing in both IShares Cohen 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 IShares Cohen and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Cohen Steers and IndexIQ, you can compare the effects of market volatilities on IShares Cohen 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 IShares Cohen with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Cohen and IndexIQ.

Diversification Opportunities for IShares Cohen and IndexIQ

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between IShares and IndexIQ is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Cohen Steers and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IShares Cohen 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 Cohen Steers 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 IShares Cohen i.e., IShares Cohen and IndexIQ go up and down completely randomly.

Pair Corralation between IShares Cohen and IndexIQ

Considering the 90-day investment horizon IShares Cohen is expected to generate 1.06 times less return on investment than IndexIQ. In addition to that, IShares Cohen is 1.05 times more volatile than IndexIQ. It trades about 0.02 of its total potential returns per unit of risk. IndexIQ is currently generating about 0.02 per unit of volatility. If you would invest  1,897  in IndexIQ on October 10, 2024 and sell it today you would earn a total of  178.00  from holding IndexIQ or generate 9.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy93.75%
ValuesDaily Returns

iShares Cohen Steers  vs.  IndexIQ

 Performance 
       Timeline  
iShares Cohen Steers 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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

IShares Cohen and IndexIQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Cohen and IndexIQ

The main advantage of trading using opposite IShares Cohen and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Cohen 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 iShares Cohen Steers 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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