Correlation Between Unity Software and IndexIQ Active

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

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

Diversification Opportunities for Unity Software and IndexIQ Active

0.43

Correlation Coefficient

Unity Software  IndexIQ Active

Very weak diversification

The 3 months correlation between Unity and IndexIQ is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software 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 Unity Software 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 Unity Software 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 Unity Software i.e., Unity Software and IndexIQ Active go up and down completely randomly.

Pair Corralation between Unity Software and IndexIQ Active

Taking into account the 90-day investment horizon Unity Software is expected to generate 12.31 times more return on investment than IndexIQ Active. However, Unity Software is 12.31 times more volatile than IndexIQ Active ETF. It trades about 0.02 of its potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.13 per unit of risk. If you would invest  2,786  in Unity Software on December 2, 2024 and sell it today you would lose (222.00) from holding Unity Software or give up 7.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	37.98%
Values	Daily Returns

Unity Software  vs.  IndexIQ Active ETF

Unity Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

IndexIQ Active ETF

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IndexIQ Active ETF are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. 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 Unity Software and IndexIQ Active

The main advantage of trading using opposite Unity Software and IndexIQ Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unity Software 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 Unity Software 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.