Correlation Between Investment Managers and IndexIQ

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

Diversification Opportunities for Investment Managers and IndexIQ

-0.15
  Correlation Coefficient

Good diversification

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

Pair Corralation between Investment Managers and IndexIQ

Considering the 90-day investment horizon Investment Managers Series is expected to generate 0.23 times more return on investment than IndexIQ. However, Investment Managers Series is 4.27 times less risky than IndexIQ. It trades about 0.04 of its potential returns per unit of risk. IndexIQ is currently generating about -0.05 per unit of risk. If you would invest  1,272  in Investment Managers Series on February 23, 2024 and sell it today you would earn a total of  289.00  from holding Investment Managers Series or generate 22.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy78.23%
ValuesDaily Returns

Investment Managers Series  vs.  IndexIQ

 Performance 
       Timeline  
Investment Managers 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Investment Managers may actually be approaching a critical reversion point that can send shares even higher in June 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Investment Managers and IndexIQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Investment Managers and IndexIQ

The main advantage of trading using opposite Investment Managers and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Managers 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 Investment Managers Series 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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