Correlation Between Invesco FTSE and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Invesco FTSE 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 Invesco FTSE and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco FTSE RAFI and IndexIQ, you can compare the effects of market volatilities on Invesco FTSE 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 Invesco FTSE with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco FTSE and IndexIQ.
Diversification Opportunities for Invesco FTSE and IndexIQ
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Invesco and IndexIQ is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Invesco FTSE RAFI and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Invesco FTSE 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 Invesco FTSE RAFI 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 Invesco FTSE i.e., Invesco FTSE and IndexIQ go up and down completely randomly.
Pair Corralation between Invesco FTSE and IndexIQ
Considering the 90-day investment horizon Invesco FTSE RAFI is expected to generate 0.2 times more return on investment than IndexIQ. However, Invesco FTSE RAFI is 4.92 times less risky than IndexIQ. It trades about 0.04 of its potential returns per unit of risk. IndexIQ is currently generating about -0.04 per unit of risk. If you would invest 3,094 in Invesco FTSE RAFI on January 20, 2024 and sell it today you would earn a total of 575.00 from holding Invesco FTSE RAFI or generate 18.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.86% |
| Values | Daily Returns |
Invesco FTSE RAFI vs. IndexIQ
Performance |
| Timeline |
| Invesco FTSE RAFI |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Invesco FTSE and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco FTSE and IndexIQ
The main advantage of trading using opposite Invesco FTSE and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco FTSE 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.| Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco FTSE RAFI | Invesco FTSE vs. Invesco Dynamic Large | Invesco FTSE vs. Invesco Dynamic Large |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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