Correlation Between MicroSectors FANG and IQ Hedge
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and IQ Hedge 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 MicroSectors FANG and IQ Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and IQ Hedge Multi Strategy, you can compare the effects of market volatilities on MicroSectors FANG and IQ Hedge 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 MicroSectors FANG with a short position of IQ Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IQ Hedge.
Diversification Opportunities for MicroSectors FANG and IQ Hedge
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and QAI is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and IQ Hedge Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and IQ Hedge go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IQ Hedge
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 6.96 times more return on investment than IQ Hedge. However, MicroSectors FANG is 6.96 times more volatile than IQ Hedge Multi Strategy. It trades about 0.04 of its potential returns per unit of risk. IQ Hedge Multi Strategy is currently generating about 0.03 per unit of risk. If you would invest 11,213 in MicroSectors FANG Index on August 24, 2025 and sell it today you would earn a total of 543.00 from holding MicroSectors FANG Index or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. IQ Hedge Multi Strategy
Performance |
| Timeline |
| MicroSectors FANG Index |
| IQ Hedge Multi |
MicroSectors FANG and IQ Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and IQ Hedge
The main advantage of trading using opposite MicroSectors FANG and IQ Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, IQ Hedge 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 Hedge will offset losses from the drop in IQ Hedge's long position.| MicroSectors FANG vs. MicroSectors FANG ETN | MicroSectors FANG vs. HCM Defender 100 | MicroSectors FANG vs. VictoryShares WestEnd Sector | MicroSectors FANG vs. MicroSectors Gold Miners |
| IQ Hedge vs. Tortoise Capital Series | IQ Hedge vs. iShares MSCI Singapore | IQ Hedge vs. iShares Transportation Average | IQ Hedge vs. Invesco Russell 1000 |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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