Correlation Between AltShares Event and IQ Merger

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

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

Diversification Opportunities for AltShares Event and IQ Merger

0.92

Correlation Coefficient

AltShares Event  IQ Merger

Almost no diversification

The 3 months correlation between AltShares and MNA is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AltShares Event Driven ETF and IQ Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Merger Arbitrage and AltShares Event 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 AltShares Event Driven ETF are associated (or correlated) with IQ Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Merger Arbitrage has no effect on the direction of AltShares Event i.e., AltShares Event and IQ Merger go up and down completely randomly.

Pair Corralation between AltShares Event and IQ Merger

Given the investment horizon of 90 days AltShares Event Driven ETF is expected to generate 1.59 times more return on investment than IQ Merger. However, AltShares Event is 1.59 times more volatile than IQ Merger Arbitrage. It trades about 0.21 of its potential returns per unit of risk. IQ Merger Arbitrage is currently generating about 0.14 per unit of risk. If you would invest  1,095  in AltShares Event Driven ETF on May 5, 2025 and sell it today you would earn a total of  58.00  from holding AltShares Event Driven ETF or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AltShares Event Driven ETF  vs.  IQ Merger Arbitrage

AltShares Event Driven

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AltShares Event Driven ETF are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AltShares Event is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

IQ Merger Arbitrage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Merger Arbitrage are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IQ Merger is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AltShares Event and IQ Merger

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

The idea behind AltShares Event Driven ETF and IQ Merger Arbitrage 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.