Correlation Between Defiance Hotel and IndexIQ

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Can any of the company-specific risk be diversified away by investing in both Defiance Hotel 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 Defiance Hotel and IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defiance Hotel Airline and IndexIQ, you can compare the effects of market volatilities on Defiance Hotel 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 Defiance Hotel with a short position of IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Hotel and IndexIQ.

Diversification Opportunities for Defiance Hotel and IndexIQ

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Defiance and IndexIQ is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Hotel Airline and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Defiance Hotel 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 Defiance Hotel Airline 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 Defiance Hotel i.e., Defiance Hotel and IndexIQ go up and down completely randomly.

Pair Corralation between Defiance Hotel and IndexIQ

If you would invest (100.00) in IndexIQ on January 20, 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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy0.0%
ValuesDaily Returns

Defiance Hotel Airline  vs.  IndexIQ

 Performance 
       Timeline  
Defiance Hotel Airline 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Defiance Hotel Airline are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Defiance Hotel is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
IndexIQ 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price confusion, may contribute to short-horizon losses for the traders.

Defiance Hotel and IndexIQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Defiance Hotel and IndexIQ

The main advantage of trading using opposite Defiance Hotel and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Hotel 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.
The idea behind Defiance Hotel Airline and IndexIQ 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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