Correlation Between SPDR Dow and IndexIQ Active
Can any of the company-specific risk be diversified away by investing in both SPDR Dow and IndexIQ 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 SPDR Dow and IndexIQ Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Dow Jones and IndexIQ Active ETF, you can compare the effects of market volatilities on SPDR Dow and IndexIQ 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 SPDR Dow with a short position of IndexIQ Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Dow and IndexIQ Active.
Diversification Opportunities for SPDR Dow and IndexIQ Active
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and IndexIQ is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Dow Jones and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF and SPDR Dow 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 SPDR Dow Jones are associated (or correlated) with IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of SPDR Dow i.e., SPDR Dow and IndexIQ Active go up and down completely randomly.
Pair Corralation between SPDR Dow and IndexIQ Active
Considering the 90-day investment horizon SPDR Dow is expected to generate 6.98 times less return on investment than IndexIQ Active. In addition to that, SPDR Dow is 1.13 times more volatile than IndexIQ Active ETF. It trades about 0.0 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.04 per unit of volatility. If you would invest 2,377 in IndexIQ Active ETF on December 2, 2024 and sell it today you would earn a total of 290.00 from holding IndexIQ Active ETF or generate 12.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 91.72% |
Values | Daily Returns |
SPDR Dow Jones vs. IndexIQ Active ETF
Performance |
Timeline |
SPDR Dow Jones |
IndexIQ Active ETF |
SPDR Dow and IndexIQ Active Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SPDR Dow and IndexIQ Active
The main advantage of trading using opposite SPDR Dow and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Dow position performs unexpectedly, IndexIQ 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 IndexIQ Active will offset losses from the drop in IndexIQ Active's long position.SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. SPDR SP International | SPDR Dow vs. iShares Cohen Steers |
IndexIQ Active vs. Ultimus Managers Trust | IndexIQ Active vs. American Beacon Select | IndexIQ Active vs. First Trust Indxx | IndexIQ Active vs. Direxion Daily Regional |
Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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