Correlation Between IQ Candriam and Gotham Enhanced

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

By analyzing existing cross correlation between IQ Candriam ESG and Gotham Enhanced 500, you can compare the effects of market volatilities on IQ Candriam and Gotham Enhanced 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 Candriam with a short position of Gotham Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ Candriam and Gotham Enhanced.

Diversification Opportunities for IQ Candriam and Gotham Enhanced

0.98

Correlation Coefficient

IQ Candriam  Gotham Enhanced

Almost no diversification

The 3 months correlation between IQSU and Gotham is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding IQ Candriam ESG and Gotham Enhanced 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Enhanced 500 and IQ Candriam 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 Candriam ESG are associated (or correlated) with Gotham Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Enhanced 500 has no effect on the direction of IQ Candriam i.e., IQ Candriam and Gotham Enhanced go up and down completely randomly.

Pair Corralation between IQ Candriam and Gotham Enhanced

Given the investment horizon of 90 days IQ Candriam ESG is expected to under-perform the Gotham Enhanced. In addition to that, IQ Candriam is 1.04 times more volatile than Gotham Enhanced 500. It trades about -0.17 of its total potential returns per unit of risk. Gotham Enhanced 500 is currently generating about -0.09 per unit of volatility. If you would invest  3,279  in Gotham Enhanced 500 on October 11, 2024 and sell it today you would lose (59.00) from holding Gotham Enhanced 500 or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

IQ Candriam ESG  vs.  Gotham Enhanced 500

IQ Candriam ESG

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IQ Candriam is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Gotham Enhanced 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gotham Enhanced 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gotham Enhanced is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IQ Candriam and Gotham Enhanced

The main advantage of trading using opposite IQ Candriam and Gotham Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Candriam position performs unexpectedly, Gotham Enhanced 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 Gotham Enhanced will offset losses from the drop in Gotham Enhanced's long position.

The idea behind IQ Candriam ESG and Gotham Enhanced 500 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.