Correlation Between IQ Merger and AGFiQ Market

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

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

Diversification Opportunities for IQ Merger and AGFiQ Market

0.73

Correlation Coefficient

IQ Merger  AGFiQ Market

Poor diversification

The 3 months correlation between MNA and AGFiQ is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding IQ Merger Arbitrage and AGFiQ Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGFiQ Market Neutral and IQ Merger 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 Merger Arbitrage are associated (or correlated) with AGFiQ Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGFiQ Market Neutral has no effect on the direction of IQ Merger i.e., IQ Merger and AGFiQ Market go up and down completely randomly.

Pair Corralation between IQ Merger and AGFiQ Market

Considering the 90-day investment horizon IQ Merger is expected to generate 2.2 times less return on investment than AGFiQ Market. But when comparing it to its historical volatility, IQ Merger Arbitrage is 5.58 times less risky than AGFiQ Market. It trades about 0.22 of its potential returns per unit of risk. AGFiQ Market Neutral is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,821  in AGFiQ Market Neutral on December 26, 2024 and sell it today you would earn a total of  131.00  from holding AGFiQ Market Neutral or generate 7.19% return on investment over 90 days.

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

IQ Merger Arbitrage  vs.  AGFiQ Market Neutral

IQ Merger Arbitrage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Merger Arbitrage are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IQ Merger is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

AGFiQ Market Neutral

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGFiQ Market Neutral are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, AGFiQ Market may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IQ Merger and AGFiQ Market

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

The idea behind IQ Merger Arbitrage and AGFiQ Market Neutral 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.