Correlation Between IndexIQ Active and ETF Opportunities

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

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

Diversification Opportunities for IndexIQ Active and ETF Opportunities

0.81

Correlation Coefficient

IndexIQ Active  ETF Opportunities

Very poor diversification

The 3 months correlation between IndexIQ and ETF is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ Active ETF and ETF Opportunities Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Opportunities Trust and IndexIQ Active 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 IndexIQ Active ETF are associated (or correlated) with ETF Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Opportunities Trust has no effect on the direction of IndexIQ Active i.e., IndexIQ Active and ETF Opportunities go up and down completely randomly.

Pair Corralation between IndexIQ Active and ETF Opportunities

Given the investment horizon of 90 days IndexIQ Active ETF is expected to under-perform the ETF Opportunities. But the etf apears to be less risky and, when comparing its historical volatility, IndexIQ Active ETF is 1.58 times less risky than ETF Opportunities. The etf trades about -0.01 of its potential returns per unit of risk. The ETF Opportunities Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,277  in ETF Opportunities Trust on December 28, 2024 and sell it today you would earn a total of  43.00  from holding ETF Opportunities Trust or generate 1.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

IndexIQ Active ETF  vs.  ETF Opportunities Trust

IndexIQ Active ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days IndexIQ Active ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, IndexIQ Active is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ETF Opportunities Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Opportunities Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ETF Opportunities is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IndexIQ Active and ETF Opportunities

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

The idea behind IndexIQ Active ETF and ETF Opportunities Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.