Correlation Between IShares Short and IQ MacKay
Can any of the company-specific risk be diversified away by investing in both IShares Short 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 Short 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 Short Maturity and IQ MacKay Municipal, you can compare the effects of market volatilities on IShares Short 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 Short with a short position of IQ MacKay. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and IQ MacKay.
Diversification Opportunities for IShares Short and IQ MacKay
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and MMIN is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and IQ MacKay Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ MacKay Municipal and IShares Short 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 Short Maturity 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 Municipal has no effect on the direction of IShares Short i.e., IShares Short and IQ MacKay go up and down completely randomly.
Pair Corralation between IShares Short and IQ MacKay
Given the investment horizon of 90 days IShares Short is expected to generate 4.14 times less return on investment than IQ MacKay. But when comparing it to its historical volatility, iShares Short Maturity is 4.67 times less risky than IQ MacKay. It trades about 0.17 of its potential returns per unit of risk. IQ MacKay Municipal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,390 in IQ MacKay Municipal on August 24, 2024 and sell it today you would earn a total of 32.00 from holding IQ MacKay Municipal or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares Short Maturity vs. IQ MacKay Municipal
Performance |
| Timeline |
| iShares Short Maturity |
| IQ MacKay Municipal |
IShares Short and IQ MacKay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and IQ MacKay
The main advantage of trading using opposite IShares Short and IQ MacKay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short 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 Short vs. iShares Treasury Floating | IShares Short vs. iShares Short Term National | IShares Short vs. iShares Short Maturity | IShares Short vs. iShares Interest Rate |
| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities | IQ MacKay vs. iShares Short Maturity |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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