Correlation Between VanEck Mortgage and IndexIQ

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

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

Diversification Opportunities for VanEck Mortgage and IndexIQ

0.33

Correlation Coefficient

VanEck Mortgage  IndexIQ

Weak diversification

The 3 months correlation between VanEck and IndexIQ is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Mortgage REIT and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and VanEck Mortgage 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 VanEck Mortgage REIT 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 VanEck Mortgage i.e., VanEck Mortgage and IndexIQ go up and down completely randomly.

Pair Corralation between VanEck Mortgage and IndexIQ

Given the investment horizon of 90 days VanEck Mortgage is expected to generate 1.77 times less return on investment than IndexIQ. In addition to that, VanEck Mortgage is 1.34 times more volatile than IndexIQ. It trades about 0.01 of its total potential returns per unit of risk. IndexIQ is currently generating about 0.01 per unit of volatility. If you would invest  2,004  in IndexIQ on October 25, 2024 and sell it today you would earn a total of  71.00  from holding IndexIQ or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.09%
Values	Daily Returns

VanEck Mortgage REIT  vs.  IndexIQ

VanEck Mortgage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Mortgage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Mortgage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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 VanEck Mortgage and IndexIQ

The main advantage of trading using opposite VanEck Mortgage and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Mortgage 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 VanEck Mortgage REIT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.