Correlation Between IQ Hedge and IndexIQ

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

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

Diversification Opportunities for IQ Hedge and IndexIQ

-0.14

Correlation Coefficient

IQ Hedge  IndexIQ

Good diversification

The 3 months correlation between QAI and IndexIQ is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi Strategy and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IQ Hedge 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 Hedge Multi Strategy 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 IQ Hedge i.e., IQ Hedge and IndexIQ go up and down completely randomly.

Pair Corralation between IQ Hedge and IndexIQ

If you would invest  3,191  in IQ Hedge Multi Strategy on September 19, 2024 and sell it today you would earn a total of  54.00  from holding IQ Hedge Multi Strategy or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

IQ Hedge Multi Strategy  vs.  IndexIQ

IQ Hedge Multi

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Hedge Multi Strategy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IQ Hedge is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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. In spite of comparatively stable technical and fundamental indicators, IndexIQ is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IQ Hedge and IndexIQ

The main advantage of trading using opposite IQ Hedge and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ Hedge 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 IQ Hedge Multi Strategy 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.