Correlation Between IndexIQ and Invesco Active

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

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

Diversification Opportunities for IndexIQ and Invesco Active

0.58

Correlation Coefficient

IndexIQ  Invesco Active

Very weak diversification

The 3 months correlation between IndexIQ and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and Invesco Active Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Active Real and IndexIQ 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 are associated (or correlated) with Invesco Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Active Real has no effect on the direction of IndexIQ i.e., IndexIQ and Invesco Active go up and down completely randomly.

Pair Corralation between IndexIQ and Invesco Active

If you would invest  2,075  in IndexIQ on October 11, 2024 and sell it today you would earn a total of  0.00  from holding IndexIQ or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

IndexIQ  vs.  Invesco Active Real

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 nearly stable basic indicators, IndexIQ is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco Active Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Active Real has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with IndexIQ and Invesco Active

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

The idea behind IndexIQ and Invesco Active Real 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.