Correlation Between Inspire SmallMid and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Inspire SmallMid 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 Inspire SmallMid and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire SmallMid Cap and IndexIQ, you can compare the effects of market volatilities on Inspire SmallMid 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 Inspire SmallMid with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire SmallMid and IndexIQ.
Diversification Opportunities for Inspire SmallMid and IndexIQ
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inspire and IndexIQ is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Inspire SmallMid Cap and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Inspire SmallMid 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 Inspire SmallMid Cap 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 Inspire SmallMid i.e., Inspire SmallMid and IndexIQ go up and down completely randomly.
Pair Corralation between Inspire SmallMid and IndexIQ
Given the investment horizon of 90 days Inspire SmallMid Cap is expected to generate 0.27 times more return on investment than IndexIQ. However, Inspire SmallMid Cap is 3.66 times less risky than IndexIQ. It trades about 0.02 of its potential returns per unit of risk. IndexIQ is currently generating about -0.04 per unit of risk. If you would invest 3,006 in Inspire SmallMid Cap on January 19, 2024 and sell it today you would earn a total of 292.00 from holding Inspire SmallMid Cap or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 83.23% |
| Values | Daily Returns |
Inspire SmallMid Cap vs. IndexIQ
Performance |
| Timeline |
| Inspire SmallMid Cap |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Inspire SmallMid and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire SmallMid and IndexIQ
The main advantage of trading using opposite Inspire SmallMid and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire SmallMid 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.| Inspire SmallMid vs. Vanguard Mid Cap Index | Inspire SmallMid vs. Vanguard Small Cap Value | Inspire SmallMid vs. Vanguard FTSE Emerging | Inspire SmallMid vs. Vanguard Large Cap Index |
| IndexIQ vs. Dimensional Targeted Value | IndexIQ vs. Dimensional World ex | IndexIQ vs. Dimensional Small Cap |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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