Correlation Between IndexIQ Active and IQ MacKay

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

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

Diversification Opportunities for IndexIQ Active and IQ MacKay

-0.24

Correlation Coefficient

IndexIQ Active  IQ MacKay

Very good diversification

The 3 months correlation between IndexIQ and IQHI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding IndexIQ Active ETF and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG and IndexIQ Active 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 Active ETF are associated (or correlated) with IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay ESG has no effect on the direction of IndexIQ Active i.e., IndexIQ Active and IQ MacKay go up and down completely randomly.

Pair Corralation between IndexIQ Active and IQ MacKay

Given the investment horizon of 90 days IndexIQ Active ETF is expected to under-perform the IQ MacKay. In addition to that, IndexIQ Active is 1.5 times more volatile than IQ MacKay ESG. It trades about -0.01 of its total potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.19 per unit of volatility. If you would invest  2,634  in IQ MacKay ESG on September 3, 2024 and sell it today you would earn a total of  57.00  from holding IQ MacKay ESG or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

IndexIQ Active ETF  vs.  IQ MacKay ESG

IndexIQ Active ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ Active ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, IndexIQ Active is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

IQ MacKay ESG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IQ MacKay ESG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, IQ MacKay is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IndexIQ Active and IQ MacKay

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

The idea behind IndexIQ Active ETF and IQ MacKay ESG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.