Correlation Between Vanguard Small and IndexIQ

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

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

Diversification Opportunities for Vanguard Small and IndexIQ

0.0

Correlation Coefficient

Vanguard Small  IndexIQ

Pay attention - limited upside

The 3 months correlation between Vanguard and IndexIQ is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ and Vanguard Small 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 Vanguard Small Cap Value 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 Vanguard Small i.e., Vanguard Small and IndexIQ go up and down completely randomly.

Pair Corralation between Vanguard Small and IndexIQ

If you would invest  17,889  in Vanguard Small Cap Value on April 24, 2025 and sell it today you would earn a total of  2,368  from holding Vanguard Small Cap Value or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Vanguard Small Cap Value  vs.  IndexIQ

Vanguard Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Value are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, Vanguard Small reported solid returns over the last few months and may actually be approaching a breakup point.

IndexIQ

Risk-Adjusted Performance

Very Weak

Over the last 90 days IndexIQ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, IndexIQ is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vanguard Small and IndexIQ

The main advantage of trading using opposite Vanguard Small and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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 Vanguard Small Cap Value 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.