Correlation Between Titan Company and IndexIQ Active

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

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

Diversification Opportunities for Titan Company and IndexIQ Active

0.92

Correlation Coefficient

Titan Company  IndexIQ Active

Almost no diversification

The 3 months correlation between Titan and IndexIQ is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited 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 Titan Company 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 Titan Company Limited 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 Titan Company i.e., Titan Company and IndexIQ Active go up and down completely randomly.

Pair Corralation between Titan Company and IndexIQ Active

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the IndexIQ Active. In addition to that, Titan Company is 4.54 times more volatile than IndexIQ Active ETF. It trades about -0.09 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about -0.09 per unit of volatility. If you would invest  2,645  in IndexIQ Active ETF on September 13, 2024 and sell it today you would lose (43.00) from holding IndexIQ Active ETF or give up 1.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.31%
Values	Daily Returns

Titan Company Limited  vs.  IndexIQ Active ETF

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

IndexIQ Active ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ Active ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, IndexIQ Active is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Titan Company and IndexIQ Active

The main advantage of trading using opposite Titan Company and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company 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.

The idea behind Titan Company Limited and IndexIQ Active ETF 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.