Correlation Between IShares SP and IndexIQ

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

Diversification Opportunities for IShares SP and IndexIQ

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between IShares and IndexIQ is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Mid Cap and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and IShares SP 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 SP Mid 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 IShares SP i.e., IShares SP and IndexIQ go up and down completely randomly.

Pair Corralation between IShares SP and IndexIQ

If you would invest  8,132  in iShares SP Mid Cap on January 14, 2024 and sell it today you would earn a total of  616.00  from holding iShares SP Mid Cap or generate 7.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

iShares SP Mid Cap  vs.  IndexIQ

 Performance 
       Timeline  
iShares SP Mid 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP Mid Cap are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal forward-looking indicators, IShares SP may actually be approaching a critical reversion point that can send shares even higher in May 2024.
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.

IShares SP and IndexIQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares SP and IndexIQ

The main advantage of trading using opposite IShares SP and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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 iShares SP Mid Cap 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.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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