Correlation Between IShares MSCI and IndexIQ
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 IShares MSCI and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and IndexIQ, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IndexIQ.
Diversification Opportunities for IShares MSCI and IndexIQ
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IndexIQ is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IShares MSCI 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 iShares MSCI EAFE 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 IShares MSCI i.e., IShares MSCI and IndexIQ go up and down completely randomly.
Pair Corralation between IShares MSCI and IndexIQ
If you would invest (100.00) in IndexIQ on January 24, 2024 and sell it today you would earn a total of 100.00 from holding IndexIQ or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 0.0% |
Values | Daily Returns |
iShares MSCI EAFE vs. IndexIQ
Performance |
Timeline |
iShares MSCI EAFE |
IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares MSCI and IndexIQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares MSCI and IndexIQ
The main advantage of trading using opposite IShares MSCI and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.IShares MSCI vs. Dimensional ETF Trust | IShares MSCI vs. Vanguard Small Cap Index | IShares MSCI vs. First Trust Multi Manager | IShares MSCI vs. Vanguard SP Small Cap |
IndexIQ vs. IQ Chaikin Small | IndexIQ vs. ClearBridge All Cap | IndexIQ vs. FlexShares Real Assets | IndexIQ vs. VictoryShares Discovery Enhanced |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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