Correlation Between IndexIQ and VanEck Inflation

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

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

Diversification Opportunities for IndexIQ and VanEck Inflation

0.71

Correlation Coefficient

IndexIQ  VanEck Inflation

Poor diversification

The 3 months correlation between IndexIQ and VanEck is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ and VanEck Inflation Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Inflation All and IndexIQ 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 IndexIQ are associated (or correlated) with VanEck Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Inflation All has no effect on the direction of IndexIQ i.e., IndexIQ and VanEck Inflation go up and down completely randomly.

Pair Corralation between IndexIQ and VanEck Inflation

If you would invest  2,764  in VanEck Inflation Allocation on August 10, 2024 and sell it today you would earn a total of  241.00  from holding VanEck Inflation Allocation or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

IndexIQ  vs.  VanEck Inflation Allocation

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IndexIQ is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

VanEck Inflation All

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, VanEck Inflation may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IndexIQ and VanEck Inflation

The main advantage of trading using opposite IndexIQ and VanEck Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IndexIQ position performs unexpectedly, VanEck Inflation 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 VanEck Inflation will offset losses from the drop in VanEck Inflation's long position.

The idea behind IndexIQ and VanEck Inflation Allocation 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.