Correlation Between IQ MacKay and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IQ MacKay and Dow Jones 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 IQ MacKay and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IQ MacKay Municipal and Dow Jones Industrial, you can compare the effects of market volatilities on IQ MacKay and Dow Jones 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 IQ MacKay with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IQ MacKay and Dow Jones.
Diversification Opportunities for IQ MacKay and Dow Jones
Good diversification
The 3 months correlation between MMIN and Dow is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding IQ MacKay Municipal and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and IQ MacKay 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 IQ MacKay Municipal are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of IQ MacKay i.e., IQ MacKay and Dow Jones go up and down completely randomly.
Pair Corralation between IQ MacKay and Dow Jones
Given the investment horizon of 90 days IQ MacKay is expected to generate 3.6 times less return on investment than Dow Jones. But when comparing it to its historical volatility, IQ MacKay Municipal is 2.21 times less risky than Dow Jones. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,359,634 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 1,070,017 from holding Dow Jones Industrial or generate 31.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IQ MacKay Municipal vs. Dow Jones Industrial
Performance |
| Timeline |
IQ MacKay and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
IQ MacKay Municipal
Pair trading matchups for IQ MacKay
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IQ MacKay and Dow Jones
The main advantage of trading using opposite IQ MacKay and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IQ MacKay position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| IQ MacKay vs. IQ MacKay Municipal | IQ MacKay vs. Franklin Liberty Federal | IQ MacKay vs. Columbia Multi Sector Municipal | IQ MacKay vs. Hartford Municipal Opportunities |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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