Correlation Between IQ Hedge and Midcap ETF

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

Diversification Opportunities for IQ Hedge and Midcap ETF

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between IQ Hedge and Midcap is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding IQ Hedge Multi-Strategy and Midcap ETF Vanguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap ETF Vanguard and IQ Hedge 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 IQ Hedge Multi-Strategy are associated (or correlated) with Midcap ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap ETF Vanguard has no effect on the direction of IQ Hedge i.e., IQ Hedge and Midcap ETF go up and down completely randomly.

Pair Corralation between IQ Hedge and Midcap ETF

Considering the 90-day investment horizon IQ Hedge Multi-Strategy is expected to generate 0.35 times more return on investment than Midcap ETF. However, IQ Hedge Multi-Strategy is 2.85 times less risky than Midcap ETF. It trades about -0.23 of its potential returns per unit of risk. Midcap ETF Vanguard is currently generating about -0.22 per unit of risk. If you would invest  2,981  in IQ Hedge Multi-Strategy on April 3, 2022 and sell it today you would lose (102.00)  from holding IQ Hedge Multi-Strategy or give up 3.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

IQ Hedge Multi-Strategy  vs.  Midcap ETF Vanguard

 Performance (%) 
      Timeline 
IQ Hedge Multi-Strategy 
IQ Hedge Performance
0 of 100
Over the last 90 days IQ Hedge Multi-Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

IQ Hedge Price Channel

Midcap ETF Vanguard 
Midcap Performance
0 of 100
Over the last 90 days Midcap ETF Vanguard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain quite persistent which may send shares a bit higher in August 2022. The latest mess may also be a sign of long-standing up-swing for the ETF venture institutional investors.

Midcap Price Channel

IQ Hedge and Midcap ETF Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with IQ Hedge and Midcap ETF

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

IQ Hedge Multi-Strategy

Pair trading matchups for IQ Hedge

The idea behind IQ Hedge Multi-Strategy and Midcap ETF Vanguard 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.

Midcap ETF Vanguard

Pair trading matchups for Midcap ETF

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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