Correlation Between MFS Active and IndexIQ Active

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

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

Diversification Opportunities for MFS Active and IndexIQ Active

0.97

Correlation Coefficient

MFS Active  IndexIQ Active

Almost no diversification

The 3 months correlation between MFS and IndexIQ is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Intermediate and IndexIQ Active ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ Active ETF and MFS 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 MFS Active Intermediate are associated (or correlated) with IndexIQ Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ Active ETF has no effect on the direction of MFS Active i.e., MFS Active and IndexIQ Active go up and down completely randomly.

Pair Corralation between MFS Active and IndexIQ Active

Given the investment horizon of 90 days MFS Active is expected to generate 1.39 times less return on investment than IndexIQ Active. In addition to that, MFS Active is 1.14 times more volatile than IndexIQ Active ETF. It trades about 0.12 of its total potential returns per unit of risk. IndexIQ Active ETF is currently generating about 0.18 per unit of volatility. If you would invest  2,093  in IndexIQ Active ETF on May 10, 2025 and sell it today you would earn a total of  39.00  from holding IndexIQ Active ETF or generate 1.86% return on investment over 90 days.

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

MFS Active Intermediate  vs.  IndexIQ Active ETF

MFS Active Intermediate

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active Intermediate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, MFS Active is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

IndexIQ Active ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IndexIQ Active ETF are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, IndexIQ Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFS Active and IndexIQ Active

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

The idea behind MFS Active Intermediate and IndexIQ Active ETF 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.