Correlation Between IShares Trust and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both IShares Trust and IQ MacKay 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 IShares Trust and IQ MacKay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and IQ MacKay ESG, you can compare the effects of market volatilities on IShares Trust and IQ MacKay 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 IShares Trust with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IQ MacKay.
Diversification Opportunities for IShares Trust and IQ MacKay
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IQHI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and IQ MacKay ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay ESG and IShares Trust 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 iShares Trust are associated (or correlated) with IQ MacKay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ MacKay ESG has no effect on the direction of IShares Trust i.e., IShares Trust and IQ MacKay go up and down completely randomly.
Pair Corralation between IShares Trust and IQ MacKay
Given the investment horizon of 90 days iShares Trust is expected to generate 4.16 times more return on investment than IQ MacKay. However, IShares Trust is 4.16 times more volatile than IQ MacKay ESG. It trades about 0.05 of its potential returns per unit of risk. IQ MacKay ESG is currently generating about 0.14 per unit of risk. If you would invest 6,644 in iShares Trust on August 26, 2024 and sell it today you would earn a total of 1,424 from holding iShares Trust or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. IQ MacKay ESG
Performance |
| Timeline |
| iShares Trust |
| IQ MacKay ESG |
IShares Trust and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IQ MacKay
The main advantage of trading using opposite IShares Trust and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, IQ MacKay 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 MacKay will offset losses from the drop in IQ MacKay's long position.| IShares Trust vs. Invesco DWA Utilities | IShares Trust vs. Invesco Dynamic Large | IShares Trust vs. Invesco Dynamic Large | IShares Trust vs. HUMANA INC |
| IQ MacKay vs. First Trust Senior | IQ MacKay vs. First Trust Low | IQ MacKay vs. First Trust Enhanced | IQ MacKay vs. First Trust TCW |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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