Correlation Between WisdomTree Floating and IndexIQ

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

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

Diversification Opportunities for WisdomTree Floating and IndexIQ

0.92

Correlation Coefficient

WisdomTree Floating  IndexIQ

Almost no diversification

The 3 months correlation between WisdomTree and IndexIQ is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and WisdomTree Floating 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 WisdomTree Floating Rate 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 WisdomTree Floating i.e., WisdomTree Floating and IndexIQ go up and down completely randomly.

Pair Corralation between WisdomTree Floating and IndexIQ

If you would invest  5,010  in WisdomTree Floating Rate on June 9, 2024 and sell it today you would earn a total of  20.00  from holding WisdomTree Floating Rate or generate 0.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	4.55%
Values	Daily Returns

WisdomTree Floating Rate  vs.  IndexIQ

WisdomTree Floating Rate

Risk-Adjusted Performance

58 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Floating Rate are ranked lower than 58 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, WisdomTree Floating is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

IndexIQ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, IndexIQ is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with WisdomTree Floating and IndexIQ

The main advantage of trading using opposite WisdomTree Floating and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Floating 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 WisdomTree Floating Rate 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 Transaction History module to view history of all your transactions and understand their impact on performance.